Beyond the Eurozone

Peter Jackson reports on the North East-based exporters increasingly looking further afield to win new business.

Seaham-based Prima Cheese only started exporting its grated cheese last year but already it’s selling to now sells to Jordan, Dubai, Lebanon and Peru.

But this is not only an export success story, Prima’s experience typifies a general trend, None of those export markets is in the European Union.

And Prima’s is not an isolated example.

In the services sector Newcastle architects Red Box Design are opening an office in China are active in Hunan province and have established a WFOE, Wholly Foreign Owned Enterprise, and a joint venture with a major developer. They report that their presence has raised significant awareness of their capacity and ability to export design ideas into China and interest is now also being shown from businesses in Shanghai and Szechuan. It is understand that they will announce major projects within the next two months.

These are just two of the North East companies whose endeavours have meant the region’s sales to the rest of the world are beating exports to Europe for the first time as it wins new markets.

In the first quarter of the year exports from the North East to non-European countries were worth about £1.9bn compared to exports to Europe of £1.8bn.

The North East - one of the UK’s strongest exporting regions – is meeting the challenges of finding new global markets outside a Eurozone mired in recession. The region is performing particularly strongly in China, Russia and Brazil.

David Coppock, UK Trade and Investment international trade director for the North East said: “It’s a good thing, we are becoming less dependent on the euro. It is, in sense, diversifying the North East economy even further.’’

He added: “The UK economy needs to trade more broadly internationally rather than just within Europe. There are other economies which are giving us sales opportunities above and beyond what Europe is offering. Whether or not that trend continues until the euro is sorted out, the Greek issue is sorted out and the government deficits in Europe are sorted out remains to be seen. That may be a trend we continue to see grow over the next two to three years.’’

The North East is not alone. The UK as a whole is exporting more goods to countries outside the EU than to countries inside for the first time since we joined the Common Market in the 1970s according to official statistics show.

Exporters have focused their efforts on fast-growing economies in Latin America and Asia to make up for the downturn in the Eurozone, where demand for British-made goods is slowing.

Some 51% of British exports in the three months to May went to countries outside the EU, marking a 13.2pc rise on the previous year.

On the other hand, exports to countries within the EU fell by 7.2% with the eurozone's hardest hit countries seeing the biggest fall in demand.

Exports to Italy fell by almost a fifth compared with a year ago, while exports to Portugal and Spain were down by 14.5% and 9.2% respectively.

Total British exports rose by 2.1% over the quarter.

Historically UK trade was been focused on the old Empire and Commonwealth, shifting to the Continent in the 1960s as it recovered from the war and trade barriers came down.

Now, with the European economy in the doldrums while other parts of the world are booming, UK exporters, including those in the North East are once more looking further afield

This does pose challenges for North East businesses. Not only do they have to work harder and travel further to find markets to replace lost European business, they face a geographical handicap. The North East faces Northern Europe and other regions are better placed to trade with Asia or the Americas.

That, however, is likely to be offset by the advantages the region share with the rest of the UK in that so many of the emerging markets are either English speaking or use English as a second language.