The UK’s top export markets are dominated by both US and European countries as would be expected. The US is the UK’s biggest export market in terms of individual countries so any improvement in the US economy should be beneficial to the UK economy.
Figure 1: UK’s Top 25 export markets. Source: ONS.
Together, the Euro-Zone countries in the list above account for 44.2% of UK exports. Although China is the biggest export market outside of the US and Euro Zone, it still only accounts for 2.9% of UK exports.
With the Euro-Zone economy slowing, any gains from the US are likely to be more than offset by Euro-Zone weakness but even US growth isn’t forecast to be stellar in the coming years, as Figure 2 shows.
Figure 2: IMF Forecasts for UK’s biggest export markets. Source: IMF.
So with the IMF downgrading growth forecasts in all of the UK’s major export markets, where is demand going to come from?
Austerity domestically and in 44% of the UK’s export markets provides a bleak outlook but as is becoming common these days, hopeful eyes are looking East to take up some of the slack.