DRAFT

The UK International Trade Index

Insights into UK trade with the rest of the worldJanuary 2020

By the side of business

2

Introduction 3

Manufacturing Export Orders Index 4

Services Export Business Index 6

International Supply Chain Index 8

UK Export Climate Index 10

UK Goods Exports by Region 11

Opportunities in Asia 12

Further Insights and Methodology 14

Contents

DRAFTWelcome to the Q4 2019 Lloyds Bank UK

International Trade Index. In this report we combine a number of unique data sources and insights to help British businesses navigate global trade channels and take advantage of new trading opportunities.

2019 was a challenging year for global trade. Whilst we enter the new year with some additional clarity on the UK’s relationship with the EU, global uncertainty continues to be an important variable for 2020. To quote the Bank of England’s November 2019 Monthly Policy Report: “Weak world activity has reduced demand for UK exports. Greater protectionism has increased global uncertainty, which is dampening investment spending in many countries, including the UK”.

It is encouraging to see, despite the weakness in global activity, that UK export activity continues to grow in key areas. The Manufacturing Export Index for Consumer Goods was boosted by continued export growth in UK luxury and sporting goods. In addition, delivery delays and supply bottlenecks fell for the third consecutive quarter. The Department for International Trade (DIT) has also highlighted progress in trade talks with Japan and Indonesia.

The latest economic data from IHS Markit indicates real areas of opportunity. While economic growth slowed in the EU, particularly across the large UK export markets of Germany and the Netherlands, growth rebounded in the US and China in Q4. Our analysis of HMRC data also highlights the drop in exports to the EU in Q2 and Q3 2019. Export growth to the US and to Asia helped to offset this fall. The Asia region stands out as the fastest growth region for UK exports

Consumer goods were boosted by continued export

growth in UK luxury and sporting goods

UK International Trade Index – Introduction

Introduction

EDWARD THURMAN

Managing DirectorHead of Global Transaction Banking,Lloyds Bank Commercial Banking

GWYNNE MASTER

Managing DirectorHead of Trade, Global Transaction Banking, Lloyds Bank Commercial Banking

Total annual UK goods exports by quarter

33

£180bn

£170bn

£160bn

£150bn

£140bn

Q3 Q4 Q1‘16

Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

£168.5bn

£177.1bn

Annual Exports to Non-EU countries Annual Exports to EU countries

over the last three years. Our analysis underscores opportunities in these fast growing economies, highlighting whisky and spirits exports to Vietnam and India, pork to China and T-shirts to Taiwan.

It is important to call out that whilst we have seen growth in the quarter, these gains have been experienced by larger firms. Smaller firms have seen export growth dip to a ten-year low. This highlights the need for strong focus on smaller UK exporters. Banks and government can help provide the support they need to identify and access broader markets for their goods, to better understand regulation and mitigate the risks associated with new and perhaps more distant and/or lower rated markets.

Lloyds Bank is committed to helping British businesses trade internationally; with particular focus on the unique challenges faced by smaller firms. As part of Lloyds Bank’s 'Helping Britain Prosper' plan, our trade teams have committed to help British businesses begin exporting and better understand new markets in 2020. We continue to offer the Lloyds Bank International Trade Portal as a key source of valuable insight for businesses looking to identify new opportunities and understand the requirements around trading overseas.

While the coming year is likely to require UK businesses to reach out to new markets, there are significant opportunities for UK exporters who rise to the challenge. The aim of this report is to support and inspire your decision making. If you'd like to discuss your trade needs and ambitions, please contact your Lloyds Bank relationship manager.

4

KEY FINDINGS

• Sustained strength in the UK’s luxury and sporting goods exports led to a rebound for the Consumer Goods sector, the only UK manufacturing sector to see export growth in Q4

• Larger manufacturers navigated the challenging economic climate to grow exports in Q4, while smaller firms saw export growth dip to a ten year low, highlighting the need for support

• Overall manufacturing exports continued to contract, with exports of capital goods falling sharply in the face of global uncertainty

Consumer goods recovery helps to stem the decline in manufacturing exports

UK International Trade Index – Manufacturing Export Orders Index

The Lloyds Bank UK International Trade Index rose 1.4 points to 47.9 in Q4, above the seven year low reported in Q3. Although this figure still represents an overall decline in exports, the rise at the end of 2019 gives reason for optimism in a time of a global economic slowdown and manufacturing weakness in the EU (the UK’s largest trading partner).

While the majority of manufacturing sectors saw exports fall, it was growth in the UK’s Consumer Goods sector that buoyed the overall Index for the fourth quarter. Once again, firms that experienced export growth underscored the importance of diversification into new markets.

The slowdown in global automotive sales continued to act as a headwind for UK manufacturing exports, with the Chemicals and Plastics sector dipping below the critical 50 growth line in Q4. A drop in global capital spending also dragged down export sales as a result of US-China trade friction and subdued global economic conditions.

Luxury consumer goods drive UK exports Export sales for the Consumer sector increased in the final quarter of 2019, bucking the overall trend for the Manufacturing sector. The Manufacturing Export Index for Consumer goods was 51.0, up from 48.2 in Q3 2019.

Luxury and sporting goods drove the improvement in export sales. These products are classified as 'Other Manufacturing', which remained firmly in growth territory and ranked as the best performing sub-category monitored by the survey. Other Manufacturing exports have continued a strong growth run since 2016, with only a minor dip in mid-2018, highlighting the strength of the UK’s luxury brands.

Food & Drink also fared better than many sectors within the broader Manufacturing sector, although exports fell slightly in the last quarter. Resilient export sales in this category are an encouraging sign that October 2019 hikes in US tariffs on a range of agri-food items have not derailed the overall strength of this sub-sector. Our HMRC analysis on page 12 highlights particular growth in the drinks sector across a number of Asian countries.

On a less positive note, British manufacturers of Textiles & Clothing reported a subdued end to 2019, with another marked reduction in export sales, a sharp contrast to strong growth seen in the first half of the year.

Automotive sector downturn worsens The Manufacturing Export Index for Transport goods dropped to 37.6 in Q4, down from 39.4 in Q3, to signal a further steep decline in overseas automotive sales. The latest reading pointed to the sharpest rate of decline in more than a decade as this sector adjusts to significant change.

Global economic uncertainty holds back capital spending and demand for goodsHeightened global economic uncertainty has led to a risk averse approach to major spending decisions for firms around the world. This decline in capital spending is reflected by a fall in the Export Index for Capital Goods, down from 44.9 in Q3 to 43.8 in Q4, and the weakest since mid-2009.

Producers of intermediate goods recorded only a modest decline in export sales, reflecting lower demand for manufacturing inputs across global supply chains. UK firms also reported that stockpiling by overseas customers earlier in 2019 meant these international customers were buying less goods from the UK at the end of the year.

Manufacturing Export Orders Index

Key PMI® movements

Export Indices1 As at Q4 2019

Δ since Q3 2019

Total Manufacturing 47.9 +1.4

Other Manufacturing2 51.9 -0.4

Timber & Paper 49.7 +3.3

Food & Drink 48.8 -0.7

Textiles & Clothing 45.9 +0.7

Chemicals & Plastics 44.9 -6.6

Electrical & Optical 44.4 +2.9

Basic Metals 44.2 -0.3

Mechanical Engineering 43.6 -2.9

Transport 37.6 -1.8

1 Quarterly averages. Any reading above 50.0 indicates an increase in new export sales 2 Including sports and leisure equipment, jewellery, and furniture

DRAFT

55

UK International Trade Index – Manufacturing Export Orders Index

Larger exporters outperform smaller firms in Q4Larger manufacturers have adapted to changing global trade flows over the year, with a Q4 Index of 50.1 showing export growth. This is a positive sign during what is categorised as a challenging year given slower global economic growth, trade tensions and regulation changes across a number of industries. On the other hand the Index for smaller firms fell to 44.0, the lowest since 2009, illustrating the difficulties smaller firms face when developing their export activity to mitigate reduced demand from their traditional trading partners.

The number of UK manufacturers exporting dips at the end of 2019After recording a remarkably stable number of manufacturers exporting throughout 2019, Q4 data signals a decline.

While still impressive, the proportion of manufacturers who export eased to 79.9% in Q4, down from a peak of 81.2% in Q3.

New Export Orders Index Monthly UK manufacturing export sales growthSeasonally adjusted, 50 = no-change

Sources: Lloyds Bank, IHS Markit PMI®

Export breakdown by broad industry sector Monthly UK manufacturing export sales growth Seasonally adjusted, 50 = no-change

Sources: Lloyds Bank, IHS Markit PMI®

Proportion of companies exporting, by size Percentage of companies reporting export orders in each month

Sources: Lloyds Bank, IHS Markit PMI®

30

35

40

45

50

55

60

65

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

30

35

40

45

50

55

60

65

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

All manufacturers

Small manufacturers (<50 employees)

Medium manufacturers (50–250 employees)

Large manufacturers (>250 employees)

Intermediate goods Capital

goods

Consumer goods

All manufacturers

Increasing rate of growth

Increasing rate of contraction

Increasing rate of growth

Increasing rate of contraction

65%

70%

75%

80%

85%

90%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Larger manufacturers have clearly adapted to changing global trade

flows over the year

6

Service exports fall at a record pace, but two key sectors hold up

UK International Trade Index – Services Export Business Index

Services Export Business Index

KEY FINDINGS

• The UK Service Export Business Index fell to a five year low of 46.5 in Q4 as economic growth in the key EU market remains subdued

• Index figures for the month of December show signs of improvement as firms report export growth in the US and parts of Asia

• Financial Services data shows export growth for the second consecutive quarter while the Transport and Communication sector saw exports rebound at the fastest pace in nearly two years

After a positive turn in Q3 2019, UK service sector exports fell in Q4. Declines are partially offset by Financial Services and Transport, and figures for the month of December show signs of improvement.

For the Service Export Business Index, firms from the UK service sector report on whether new work received from abroad is higher, the same, or lower than the previous month, as an early indicator of export sales. Any number above 50 signals an increase in service exports.

Q4 Service Export Business Index falls to a five year low

The Services Export Business Index fell from 49.6 in Q3 to a new five year low of 46.5 in Q4 2019, signalling a sharp contraction in service exports over the quarter. After a period of falling service exports beginning in Q4 2018, the Index improved in mid 2019 and briefly reached the 50 mark in the summer. On a positive note, Q4

contraction may be short lived as figures for the month of December show an improvement that moves closer to stability (47.1).

Survey participants generally linked the fall in new export orders to delayed decision making among clients concerned about the implications of Brexit. Service exporters also mentioned global tensions and subdued markets in Europe. As a bloc, the EU is the UK’s largest market for service exports, particularly for financial services and other business services such as accounting, advertising, research and engineering. Our Lloyds Bank Export Climate Index outlines the challenging economic conditions in Europe, impacting UK service exports.

Services companies that did report export growth commented on successful marketing efforts and stronger demand from the US and parts of Asia. We highlight a similar point for goods exporters in the HMRC data section (see page 12).

New Export Business IndexUK services export sales growthSeasonally adjusted, 50 = no-change

Sources: Lloyds Bank, IHS Markit PMI®

44

46

48

50

52

54

56

58

2015 2016 2017 2018 2019

Key PMI® movements

New Export Sales1 As at Q4 2019

Δ since Q3 2019

Total Services 46.5 -3.0

Transport & Comms 51.8 +4.5

Financial Services 50.2 -1.3

Technology Services 47.8 +2.0

Business-to-business 44.7 -2.61 Quarterly averages. Any reading above 50.0 indicates an increase in export sales.

No breakdown available for hotels, restaurants and catering and other personal/consumer services.

All firms

Manufacturing

Service sector

Increasing rate of growth

Increasing rate of contraction

7

DRAFT

Financial Services post export growth, along with Transport and Communications

Two of the four sectors within the UK service sector posted export growth during Q4. Financial Services exports, the UK's second-largest service export sector, increased in both Q3 and Q4 2019, with Q4 growth softer than Q3.

The Transport and Communication service sector reported a return to export growth in Q4 and was the best-performing service category in the quarter. The improvement in exports for this sector was also the strongest since the first quarter of 2018. As this sector includes UK transport and storage firms, this growth may be driven by stockpiling in previous quarters as firms look to complete the delivery of goods.

In contrast, business-to-business services experienced the sixth successive quarter of export contraction and the sharpest decline since data became available in Q3 2014. Technology firms also saw a fall in exports, although this has softened from Q3's record drop and declines were moderate overall.

Technology services remains an important growth market, and the proportion of exporters in this segment (76.2% at Q4 2019) remained the largest of the four sub-categories monitored by the survey.

Two of the four sectors within the UK service sector posted export

growth during Q4

Exports breakdown by key industry sub-sectorsUK services export sales Seasonally adjusted, 50 = no-change

Sources: Lloyds Bank, IHS Markit PMI®

40

45

50

55

60

65

2015 2016 2017 2018 2019

Technology Services

Financial Services

Transport and Communication

Increasing rate of growth

Increasing rate of contraction

8

KEY FINDINGS

• Global delivery times and bottlenecks improved for the third successive quarter, with the International Supply Chain Index at 50.9. This improvement was driven largely by the manufacturing slowdown across Central Europe

• UK stockpiling in the previous quarter led to increased domestic delivery times in Q4

• Both euro area customers and UK firms reduced stock levels at the end of 2019. In contrast, the US saw a bout of stockpiling

• UK manufacturers experienced the lowest cost inflation in almost four years in Q4, while the availability of inputs remained favourable despite falling stock levels

UK International Trade Index – International Supply Chain Index

The final quarter of 2019 continued the trend of improving global supply conditions, with firms across the world reporting quicker delivery times and fewer bottlenecks. The International Supply Chain Index for Q4 was 50.9, little-changed from Q3's ten-year high of 51.1.

The Index can range from 0 to 100 with any reading above 50 signalling improving lead times, fewer delivery delays, and/or increased availability of key manufacturing inputs. The higher above the 50 mark, the lower the pressure on supply chains. Smooth supply chains positively impact prices, production capacity, and working capital for UK firms.

European manufacturing slowdown continues to shorten global lead timesThe latest results marked the third successive quarterly improvement in global supply chain pressure. This is a notable shift, in stark contrast to the increasing lead times reported 12 months earlier. The main driver of what is seemingly a positive trend has been a sustained slowdown in global manufacturing production and trade, decreasing demand for supply chain performance. The Global Manufacturing PMI® surveys reported stable worldwide factory activity in Q4 2019, following a contraction in Q3. Manufacturing buying levels have fallen, freeing up transport capacity and allowing suppliers to reduce production backlogs.

Easing of supply chain pressure has been strongest in Europe, particularly in Germany, Austria and the Czech Republic. Q4 manufacturing PMIs for these three countries were trending at some of their lowest levels for the past decade. Italy also reported fewer delivery delays in the last quarter as the country’s manufacturing industry contracted.

In contrast, transport strikes in France and capacity shortages in the Netherlands caused longer lead times in both countries. Greece also bucked the wider European trend as supply chain pressures in Q4 increased, in line with positive economic growth.

Delivery times also improved across the Middle East and North Africa, although at the slowest pace in eight years. Increased reports from Saudi Arabia and the UAE indicate lower supplier stock levels and payment issues, leading to delays.

The US reports a spell of stockpiling while UK and euro area inventories are run downThe UK, along with most of continental Europe, reported falling stock levels in the final quarter of 2019. This follows stockpiling by UK and euro area firms earlier in the year. UK stockpiling in Q3 led to longer average lead times across the country in Q4, with the UK index for delivery and bottlenecks at 48.0, although this was not as severe as in previous quarters.

International Supply Chain Index

Global supply chain pressure continues to ease while cost inflation falls to lowest level in nearly four years

DRAFT

30

35

40

45

50

55

60

65

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

25

30

35

40

45

50

55

60

65

70

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

99

UK International Trade Index – International Supply Chain Index

Unlike the UK and Europe, delivery times in both Asia and North America steadily worsened in Q4. These two regions have been the most resilient to the global manufacturing slowdown and have seen goods production continue to rise, albeit at a slower pace compared to historical levels.

North America reported a sharp increase in stock levels in the last quarter, which placed pressure on supply chains; contributing to the deterioration in delivery times. This stockpiling may be the result of extended trade tensions and tariff discussions, which now appear to be resolving.

UK supply shortages and cost inflation remain lowQ4 cost inflation for UK goods producers fell to its lowest level in almost four years. Downward pressure on price continued from Q3, as slower global demand for commodities weighed on prices. Only electronics and food items showed any notable pricing increase in the last quarter.

Reports of supply shortages, largely of commodities and other inputs to UK manufacturers, were up slightly in Q4. This reflects lower inventory levels across many of the UK's European trading partners. Supply levels are much improved compared to 2018 levels, although UK firms did note some difficulties sourcing foodstuffs in the last quarter.

UK International Supply Chain Index Monthly comparison of supplier delivery timesSeasonally adjusted, below 50 = longer delivery times. Country weighted by UK import origin.

Sources: Lloyds Bank, IHS Markit PMI®

UK Manufacturing Sector: items reported in short supply Monthly comparison of supply shortagesRelative index where 100 = highest monthly number of reported shortages since 1996.

Sources: Lloyds Bank, IHS Markit PMI®

UK Manufacturing Sector: stocks of purchasesMonthly comparison of stocks of purchases Seasonally adjusted, 50 = no change

Sources: Lloyds Bank, IHS Markit PMI®

0

10

20

30

40

50

60

70

80

90

100

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

All countries

UK domestic supply chains

EU supply chains

US

UK

EU

Improving delivery times

Worsening delivery times

Rising stocks

Falling stocks

Cost inflation for UK goods producers

fell to its lowest level for almost

four years

Electrical components

Timber

Food Items

10

Economic conditions soften in Europe while growth in US and Asia present opportunities

UK International Trade Index – UK Export Climate Index

UK Export Climate Index

KEY FINDINGS

• The opportunity for UK exports continued to grow with an Index of 50.3, although this is the lowest index level for seven years

• Slower economic growth was reported across Europe in Q4, particularly in the key UK export markets of Germany and the Netherlands

• Economic growth rebounded in the US and China in the last quarter of 2019, highlighting UK export opportunities into these markets

The trend of softer economic growth across the globe continued in the final quarter of 2019, according to the latest data from IHS Markit. Nearly half of the 40+ countries surveyed by IHS Markit reported growth in Q4, although the UK Export Climate Index – a trade weighted measure of global demand for British goods and services – fell from 50.7 to 50.3. This indicates modest growth in export opportunities, despite the seventh consecutive quarter of slower growth.

As a trade weighted index, this is heavily influenced by the UK’s largest export markets, particularly the EU. Contraction in Europe further highlights the needs for export diversification.

European economic growth continues to slow

UK export performance is directly linked to the economic performance of its major trading partners. Germany and the Netherlands – two of the top destinations for UK exports – contracted in Q4 2019, for the first time in six-and-a-half years. Economic contraction was also recorded in Italy, Austria, Poland and the Czech Republic, leading to a fall in the EU element of the UK Export Climate Index to 50.2.

UK Export Climate Index, EU vs. Non-EU Trade-weighted international economic growthSeasonally adjusted, 50 = no-change. Country weighted by UK export destination

Sources: Lloyds Bank, IHS Markit PMI®

35

40

45

50

55

60

65

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Non-EU

EU

Increasing rate of growth

Increasing rate of contraction

Key PMI® movements

UK Export Climate Index1

As at Q4 2019

Δ since Q3 2019

Total 50.3 -0.4

EU 50.2 -0.7

Non-EU 50.4 -0.2

Composite Business Activity Index1

Germany 49.7 -0.6

France 52.1 +0.2

United States 51.9 +0.5

China 52.6 +1.2

1 Quarterly averages. Any readings above 50.0 indicates economic growth. IHS Markit PMI®

Helping to maintain levels over 50, France(52.1.), Ireland (51.8.), and Greece (54.9) saw higher levels of growth in Q4.

US growth strengthens in final quarter

After two quarters of falling growth, the US economy regained momentum at the end of 2019. Stronger economic growth in the US was reported in both the manufacturing and service sectors.

Economic growth in Asia remains strong

The Asia region posted an Index of 51.1 showing further growth and opportunity for UK exports. This is a point of focus in the Lloyds Bank analysis of HMRC government data (page 12). While Hong Kong saw an intensified downturn, driven by political unrest and related economic disruption, mainland China saw an improvement in economic data, with Q4 growth at the highest level since Q1 2018. India, the Philippines and Vietnam also posted solid growth.

11

DRAFT

UK International Trade Index – UK Goods Exports by Region

UK Goods Exports by Region

Growth in annual exports at Q3 2019 based on HMRC Regional Trade statistics

Scotland0.5% (£0.2bn)

46.8% (£10.9bn)

12.9% (£3.9bn)

National0.3% (£1.0bn)

23.4% (£65.6bn)

21.5% (£61.0bn)

LegendQuarterly growth

3 year growth

5 year growth

North of England-1.0% (-£0.6bn)

10.1% (£5.3bn)

5.0% (£2.8bn)

Midlands0.6% (£0.3bn)

22.5% (£10.3bn)

26.4% (£11.7bn)

Northern Ireland0.3% (£0.0bn)

22.0% (£1.7bn)

35.3% (£2.4bn)

Wales0.2% (£0.0bn)

28.8% (£4.0bn)

19.3% (£2.9bn)

East of England-0.7% (-£0.2bn)

10.6% (£2.8bn)

19.2% (£4.7bn)

South of England-0.0% (-£0.0bn)

20.9% (£11.9bn)

28.6% (£15.3bn)

London3.7% (£1.5bn)

40.0% (£12.0bn)

34.9% (£10.9bn)

A comparison of Q3 annual export growth to previous three and five year growth figures, illustrates changing trends for UK regional exports. The majority of regions saw a boost in exports during 2016 as the fall in sterling increased the attractiveness of UK goods. Over the last year, however, export strength has varied. All four UK countries saw exports increase in the year to Q3 2019, while the North, East and South regions of England saw a decrease. Growth occurred in London and the Midlands.

Previous editions of the UK International Trade Index can be found here

Opportunities in Asia

12

UK International Trade Index – Opportunities in Asia

In Lloyds Bank's analysis of HMRC’s regional trade data, we highlight the opportunities for UK exporters in Asia. The EU is the UK’s largest export market, yet trade data shows that exports to the EU fell in Q2 and Q3 of 2019. We observed this trend before 2016. When we look at the relative size and growth of UK goods exported to global geographic regions over the last three years, North America and Asia stand out. (For a deeper analysis of UK exports to the US, please see our April 2019 edition).

North America is the second largest global export region after the EU, with Asia only just behind, in third position. Strikingly, three year compounded export growth to Asia was up 11.3% compared to 7.7% for the US and 6.9% for the EU. When we look at the relative size and growth for countries in the Asia region, this further underscores real opportunities for UK exporters.

From the UK's top ten export markets, we highlight those with the fastest growing UK exports on the opposite page. Whisky and spirits exports to Asia show particular strength with rapid growth in sales to India and Vietnam. Also on our radar are sales of suitcases to Hong Kong, medicines and cars to Japan, pork to China and T-shirts to Taiwan.

Another trend worth highlighting is as a result of changes in Chinese regulations for the import of recycling material, which has driven UK scrap metal exports to other Asian markets. This in turn has fed notable rapid growth in Bangladesh and benefited other markets like Vietnam, Thailand, Indonesia and India.

£180bn

£170bn

£160bn

£150bn

£140bn

Q3 Q4 Q1‘16

Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

£168.5bn

£177.1bn14%

16%

12%

10%

2%

0%

6%

8%

4%

-2%

Mid

dle

East

and

Nor

th A

frica

£18.5bn

£5.1bn £15.1bn£6.0bn

£5.2bn £5.5bn

£167.0bn£61.0bn

£54.0bn

Latin

a Am

erica

and

the

Carib

bean

Wet

sern

Eur

ope

Sub-

Saha

ran

Afric

a

Ocea

na

East

ern

Euro

pe

Eur

opea

n U

nion

North

Amer

ica

Asia

UK exports to the EU fell in the last two quarters

The UK's top ten exports markets in Asia have continued to grow over the last three years

Over the last three years, UK exports to Asia region have grown the fastest

20%

15%

10%

5%

0%

Sout

h Ko

rea

£4.1bn

Thai

land

£1.2bn

Mal

aysia

£1.3bn

Sing

apor

e

£5.1bn

Taiw

an

£1.4bn

Chin

a

£17.0bn

Japa

n

£7.0bn

Indi

a

£5.0bn

Hong

Kon

g

£8.3bn

Viet

nam

£0.7bn

Size of bubble = £ Q3 Value of exports Position = 3 year Compounded Annual Growth Rate

Annual Exports to Non-EU countries

Annual Exports to EU countries

Size of bubble = £ Q3 Value of exports Position = 3 year Compounded Annual Growth Rate

13

DRAFT

UK International Trade Index – Opportunities in Asia

Air or vacuum pumps

£41.0m; 218%

Silver£399.8m; 103%

Whisky and spirits£72.0m; 73%

Ships and boats£36.1m; >1000%

Clocks and watches

£55.4m; 58%

Trunks and suitcases

£43.7m; 130%

Turbojets£809.2m; 73%

Paintings£335.5m; 89%

Q1 Q2 Q3 Q4‘16

Q1 Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

-5%

10%

15%

-5%

20%

-15%

10%

0%

15%

-10%

10%

-10%

Q1 Q2 Q3 Q4‘16

Q1 Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

-5%

10%

15%

-5%

20%

-15%

10%

0%

15%

-10%

10%

-10%

Q1 Q2 Q3 Q4‘16

Q1 Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

-5%

10%

15%

-5%

20%

-15%

10%

0%

15%

-10%

10%

-10%

Q1 Q2 Q3 Q4‘16

Q1 Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

-5%

10%

15%

-5%

20%

-15%

10%

0%

15%

-10%

10%

-10%

Q1 Q2 Q3 Q4‘16

Q1 Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

-5%

10%

15%

-5%

20%

-15%

10%

0%

15%

-10%

10%

-10%

Q1 Q2 Q3 Q4‘16

Q1 Q2 Q3 Q4‘17

Q1 Q2 Q3 Q4‘18

Q1 Q2 Q3‘19

-5%

10%

15%

-5%

20%

-15%

10%

0%

15%

-10%

10%

-10%

Quarterly growth in annual exports Selected fast growing exports

Hong Kong

Japan

Vietnam

China

India

Taiwan

X-Ray equipment£9.2m; 540%

Scrap Iron and Steel

£44.9m; 956%

Pharma products£29.5m; 59%

Whisky and spirits£12.2m; 204%

Cars£406.0m; 59%

Turbojets£524.8m; 104%

Scientific instruments£36.0m; 64%

Medicines£145.0m; 29%

Pharma products£435.0m; 52%

Coins and Jewellery

£2,207.1m; 91%

Turbojets£223.1m; 70%

Pig meat£21.4m; 109%

Pharma products£52.7m; 41%

Whisky and spirits£55.1m; 30%

T-shirts£14.6m; >1000%

Fresh/chilled fish£23.3m; 375%

3 year growth £ and %

14

UK International Trade Index – Further Insights and Methodology

Further Insights and Methodology

Methodology The UK International Trade Index is compiled by IHS Markit and based on the results of surveys covering over 25,000 purchasing executives in over 40 countries. Together these countries account for an estimated 95% of global manufacturing output and more than 75% of global service sector gross value added. Questions are asked about real events and are not opinion based. An index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease. All charts and commentary relate to a quarterly rolling average of monthly index readings.

The UK Manufacturing PMI® is compiled by IHS Markit from responses to questionnaires sent to purchasing managers in a representative panel of around 600 manufacturers. The UK Services PMI®

is compiled by IHS Markit based on original survey data collected from a representative panel of around 700 companies based in the UK service sector. The panels are stratified by detailed sector and company workforce size, based on contributions to GDP. Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. Data is presented in the form of diffusion indices, where the index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices are then seasonally adjusted.

Underlying survey data is not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate.

CHRIS SPEDDINGManaging Director,

Corporate and Institution Trade Sales, Global Transaction Banking, Lloyds Bank

T: +44 738 424 5076 E: chris.spedding@lloydsbanking.com

The editors

TIM MOOREAssociate Director, Economic Indices,

IHS Markit

T: +44 149 146 1067 E: tim.moore@ihsmarkit.com

ANDREA MELVILLEManaging Director,

Commercialisation & Propositions, Global Transaction Banking, Lloyds Bank

T: +44 790 081 4610 E: andrea.melville@lloydsbanking.com

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For further information on the PMI® survey methodology, please contact economics@ihsmarkit.com.

The trends in UK goods exports and regional goods exports on pages 11 to 13 are based on HMRC Regional Trade statistics (RTS) for the year ending in Q3 2019. This provides a breakdown of export flows between regions of the UK and other countries. Goods exports are categorised by a proprietary grouping of Standard International Trade Classification and standard geographic regions. The data is not available for all partner countries and not all trade can be assigned to one of the British regions. All values are annualised rolling quarters.

DRAFT

UK International Trade Index – Important Information

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IMPORTANT INFORMATIONThis document has been prepared for information purposes only and must not be distributed, in whole or in part, to any person without the prior consent of Lloyds Bank plc (together with its affiliates, “Lloyds Bank”). This document should be regarded as a marketing communication, it is not intended to be investment research and has not been prepared in accordance with legal requirements to promote the independence of investment research and should not necessarily be considered objective or unbiased. This document is not independent from Lloyds Bank’s proprietary interests, which may conflict with your interests. The authors of this document may know the nature of Lloyds Bank’s proprietary interests or strategies; Lloyds Bank may engage in transactions in a manner inconsistent with the views expressed in this document; and Lloyds Bank’s salespeople, traders and other professionals may provide oral or written market commentary or strategies to clients which may conflict with the opinions expressed in this document. Securities services offered in the United States are offered by Lloyds Securities Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority.

Any views, opinions or forecast expressed in this document represent the views or opinions of the author and are not intended to be, and should not be viewed as advice or a recommendation. Lloyds Bank makes no representation and gives no advice in respect of legal, regulatory, tax or accounting matters in any applicable jurisdiction. You should make your own independent evaluation, based on your own knowledge and experience and any professional advice which you may have sought, on the applicability and relevance of the information contained in this document.

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This document has been prepared by Lloyds Bank. Lloyds Bank is a trading name of Lloyds Bank plc, Bank of Scotland plc and Lloyds Bank Corporate Markets plc. Lloyds Bank plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Bank of Scotland plc. Registered Office: The Mound, Edinburgh EH1 1YZ. Registered in Scotland no. SC327000. Lloyds Bank Corporate Markets plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 10399850. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278, 169628 and 763256 respectively.

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About IHS MarkitAbout IHS Markit IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2020 IHS Markit Ltd. All rights reserved.

DisclaimerThe intellectual property rights to the data provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing

is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or

delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers’ Index®

and PMI® are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates.

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January 2020