UK companies have ramped up stockpiling ahead of Brexit as export opportunities for manufacturers weakens, according to new research from Lloyds Bank.
The lender’s international trade index shows that export growth fell to its weakest level in almost three years in the fourth quarter of 2018.
Exports of consumer goods held up well, Lloyds said, but the transport sector was hit by changing emissions regulations and new rules about diesel vehicles.
Exports in the service sector fell in the last three months of 2018, bringing to an end three four years of growth.
Political uncertainty at home and abroad, along with weakening economic growth in key markets, were cited as the drivers for the export downturn.
Meanwhile, the data showed that UK manufacturers had increased stockpiling efforts over recent months due to the threat of shortages and disruption posed by Brexit.
The UK Manufacturing PMI Index for purchases of stocks jumped up to 53.7 for the month of December, from 51.1 in the previous month.
Gwynne Master, managing director and global head of trade for Lloyds Bank Global Transaction Banking, said: “We should be mindful of the impact of fluctuating trading conditions and global and domestic political uncertainty on the UK’s exporters.
“Against this backdrop of challenging conditions, it’s encouraging to see international demand for UK consumer goods sustain the longest period of manufacturing export order growth since the financial crash, even if the pace of growth has weakened.”
She said the findings highlighted how important it is for companies to deal with a diverse range of markets.
“Exporting to a mixture of different countries would help, for example, a business offset the impact of a Chinese downturn if they were also exposed to the Netherlands, Ireland or Spain, which are all showing real strength,” she said.
