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January 2011
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Importers’ confidence slumps in January
Trade confidence remains at 106
David Sear, Global Managing Director at
in January after importers make a
Travelex Global Business Payments, said:
shaky start to the year
• Fall in importers’ confidence driven by lingering “UK GDP figures in the fourth quarter of 2010
concerns over economy were undoubtedly disappointing. Even with the
• luggish domestic demand may be affecting importers’
S wintry weather factored in, the news came as
trade and confidence levels a major shock. However, it doesn’t seem like
British exporters are worrying about much at
I
• mporters continue to show lack of confidence in future
the moment, apart from the performance of
trade conditions
their own business. Their recovery is well on
track, bolstered by the resurgence of exports
Exporters’ expectations dip slightly and the renewed political push for an export
led recovery. In terms of growth figures for the
but overall confidence shows no
first quarter of 2011, exporters’ resilience is
signs of abating
extremely encouraging.”
M
• ajority of exporters display a positive attitude about
the UK economy
Travelex forecast for December UK Trade Deficit
C
• onfidence riding on the back of a resurgence of export
activity in manufacturing sector Narrow less than £8.7 billion 30%
S
• light dip in number of exporters who forecast growth in
Widen more than £8.7 billion 50%
their export activity
Unsure 20%
Travelex Confidence Index,
January 2011
Trade Confidence remained stable at 106 during January
106
0 200
Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
Emma Kane, 020 7566 6700, ek@redleafpr.com
January 2011
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Travelex Confidence Index summary
The British Trade community started the year in a mire Oct Nov Dec Jan
of uncertainty, as importers’ confidence dwindled whilst
exporters remained defiant. Whilst the overall Confidence
Index was stable at 106, confidence in the International Confidence Index (TCI) 104 112 106 106
Trade Index and Current Situation Index dropped three
points to 103, driven by negative attitudes to current and Current Situation Index 100 110 106 103
future economic conditions.
International Trade Index 100 113 106 103
Importers fear economic climate whilst exporters Expectations Index 101 104 100 100
remain positive
British importers continued to express a large degree
of pessimism towards the UK economy in January, with who were unsure of an export-led recovery increased to
only 40% showing confidence in the current economic 22%, the highest in 10 months. This demonstrates that
climate, a 19% fall from December. Their pessimism forced despite the current buoyancy of Britain’s export market,
trade confidence in the UK economy to a two month low. businesses remain uncertain of the impact a weak pound
A key contributing factor is likely to have been continued has on Britain’s exports and understand that export
economic uncertainty over the looming government conditions are extremely volatile.
spending cuts, as well as rising inflation, which is helping to
push consumer prices up.
Tighter credit controls hampers business
In contrast, exporters’ attitudes towards the economy confidence
remained fairly buoyant, with 67% expressing confidence Tighter credit conditions hampered importer and exporter
in current conditions. This is consistent with last month’s confidence in January, as businesses with less access
encouraging trade figures, which showed that excluding to credit revealed their concerns over trading conditions
oil and erratic items, the volume of goods exports rose by and the economy. Nearly half (47%) of the exporters and
3.4 per cent and the volume of goods imports rose by 0.3 importers interviewed said they thought it was difficult to
per cent, compared with October. access credit, whilst 32% said they hadn’t tried. This in
turn impacted on their confidence in the economy, which
Pre-GDP figures, concerns over double dip hit its lowest in two months.
had faded
January’s report provides us with an interesting Expectations for the future
snapshot into the opinions of British exporters and January saw the trade community becoming slightly less
importers before news of the UK’s shocking economic confident about future international trading conditions,
contraction in the fourth quarter of 2010 was released. the lowest since September. This fall in confidence was
The Index clearly shows that before the data release, driven once again by downbeat importers, with only 52%
businesses were fairly sanguine about sustainable expressing confidence in the future, compared to 72%
economic growth, with 61% confident that a double dip of exporters.
recession would be avoided. Importers were slightly
more confident in this area than exporters. Confidence in business prospects remained stable at
62%, although this was driven largely by an optimistic
base of exporters, where over half (63%) expressed
Confidence in export led recovery is buoyant
positivity about their business trade over the next 6 – 12
Confidence in an export-led recovery was fairly buoyant months. Importers, on the other hand, expressed less
in January, remaining at the long-run average of 46%. confidence, with less than half (48%) showing confidence
Interestingly, the number of importers and exporters about business prospects.
Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
Emma Kane, 020 7566 6700, ek@redleafpr.com
January 2011
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Index at a glance
Travelex Confidence Index (TCI) Confidence Index
Research took place on the 11th – 25th January 2011 114
112
110
The Travelex Confidence Index was stable at 106 108
in January, unmoved from the previous month. 106
104
102
Sub-indices
100
The Travelex Confidence Index measures the views and 98
sentiments of the UK’s importers and exporters across 96
94
three sub-indices: Current Situation Index, International Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Trade Index and the Expectations Index.
The Current Situation Index Current Situation Index
The Current Situation Index monitors importers and 115
exporters views on current government policies and 110
availability of business credit. This index fell by 3 points in
105
January, as businesses access to credit hampered importer
and exporter confidence. Nearly half (47%) of the exporters 100
and importers interviewed said they thought it was difficult to
95
access credit, whilst 32% said they hadn’t tried.
90
85
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
The International Trade Index International Trade Index
The International Trade Index measures importers 115
and exporters views on trading conditions. This Index
110
decreased by 3 points in January. The proportion of
importers who are confident about the economic and 105
trade conditions fell again in January, with only 40%
showing confidence in the current economic climate, a 100
19% fall from December. Exporters’ attitudes towards the 95
economy remained fairly buoyant, with 67% expressing
confident in current conditions. 90
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
The Expectations Index Expectations Index
The Expectations Index measures importers and exporters 106
views on whether international trade conditions will improve 104
over the next 6-12 months, and whether their business 102
will see growth in its international activity. Overall, the 100
Expectations Index remained stable at 100 in January, 98
although confidence in future trading conditions receded 96
slightly. The proportion of importers and exporters who 94
are confident trade conditions will improve over the next
92
12 months dropped 2% to 60%. Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
Emma Kane, 020 7566 6700, ek@redleafpr.com
January 2011
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www.travelexbusiness.com/uk/confidence-index
Demographics
Issues affecting growth Overseas customers and suppliers
80 32
Overall health of 80 Asia 29
the global economy 79 28
63 75
Cheaper competitors 67 Europe 75
71 74
59 North America 22
Reduced budgets 66
(USA)
24
22
64
68 12
Currency volatilaty 68 South America 13
58 8
International regulation 37
47 North Africa
11
7
and compliance 35 9
33 11
Credit availability 47 South Africa 8
40 11
Efficiency of 33
47 Australia
13
12
international payments 38 9
November
28 9
Political influence 38 New Zealand 8 December
38 8
January
Lack of human 22
31 Other
13
14
resources 24 12
November
Balance of 18
25 December
trade data 21
January
None of 1
3
the above 5
Industry sector Business location
49 85
Manufacturing 22
43
England 89
91
2 1
Construction 3 Wales 1
6 1
Fuel, utilities 5
and mining
1
9
Scotland 3 November
4
24
December
Wholesale/retail 9
28 Other 8
trade 12 5 January
Hotels and 1
restaurants 1
Transport/ 2
4
storage 7
2
Communictions 1
3
Real estate
Business 3
4
services 4
Health/social work 1
4 November
1
December
1
January
15
Other 16
8
Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
Emma Kane, 020 7566 6700, ek@redleafpr.com
January 2011
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www.travelexbusiness.com/uk/confidence-index
feedback from some of the exporters and
importers interviewed in January
This month we spoke to exporters and
importers about the Government’s Austerity ABOUT ThE TrAvElEx CONfIDENCE INDEx
(TCI)
plans and asked them what impact it might
have on their business. The Travelex Confidence Index measures the views
and sentiments of the UK’s importers and exporters.
“Spending cuts have to be made and we have to endure them.”
The index is based on the response to three core
Importer, England question areas – the respondents’ appraisal of
current international trade and economic conditions,
“My guess is that it will affect business because there will
respondents’ appraisal regarding ability to obtain
be less investment. That’s going to have a knock on affect
credit and the respondents’ expectations of future
on us because we primarily deal business to business and
international trade conditions over the next 6 to 12
people invest by buying our equipment to perform checks
months.
in safety.”
Both Importer & Exporter, England For more information on the TCI visit
www.travelexbusiness.com/uk/confidence-index
“Our concern is the impact it will have on the consumer
market retail market. We import lots of clothes so ABOUT TrAvElEx GlOBAl BUSINESS
obviously we are dependent upon the retailer. We are PAyMENTS
very much dependent on retail demand for import of Travelex Global Business Payments is a global
products from Asia” foreign exchange specialist providing the payment
Both Importer & Exporter, England and receipt of domestic and international funds for
businesses of all sizes.
Exporter, England For more than 30 years, Travelex Global Business
Payments have provided clients with sophisticated
“VAT should have stayed at 17.5% rather than market knowledge, leading edge technologies
increasing it to 20%. VAT is effectively a taxation and practical and innovative solutions tailored to
on labour or on the working man. The majority of business requirements.
manufacturing industries have a 25% purchasing cost
Every year, Travelex Global Business Payments
on all goods invoice, therefore 75% of the costs are
processes payments around the world for over
due to labour, which is incorporated in paying VAT.” 35,000 businesses.
This report has been prepared solely
“In terms of VAT, I have little concern where it is for informational purposes and does not
recoverable. In terms of our customers, we are very lucky purport to provide any financial, investment
as a lot of them are VAT exempt or we are exporting so or professional advice. Travelex makes no
the affect on our organisation will be small. Spending cuts representation, warranty or condition of any
will impact us massively because a large proportion of our kind, expressed or implied, in this report.
customers are health providers which directly impacts
their ability to purchase diagnostic media within the
laboratories and hospitals.”
Both Importer & Exporter, England
“I think that spending cuts will reduce the demand from
some of our customers who are either Government
departments or receive subsidies from the Government.”
Importer, England
Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
Emma Kane, 020 7566 6700, ek@redleafpr.com
