Exports Drive UK Chemicals Growth in Early 2018
UK trade of chemicals and pharmaceuticals returned to positive territory in February following a year of negative growth, according to the Chemical Industries Association’s (CIA) latest survey of business confidence. Exports to the EU and the rest of the world in January and February 2018 were up 5% year-on-year.
Steve Elliott, the association’s chief executive, said export volume growth was at near record levels and nearly 90% of its members had reported either an increase in sales volume or retention of volume compared to the end of 2017. In addition, all survey respondents said they had increased or maintained investment in R&D, and 93% reported a similar position for capital expenditure.
CIA expects exports to dominate UK chemicals growth in the coming year, helped by weaker sterling and an expanding EU market, while domestic demand appears to be weakening. The association is forecasting growth in chemicals output to slow to 2% in 2018 versus 2.9% in 2017. Pharmaceuticals output is also anticipated to grow by 2%, compared to a decline of 4.8% last year.
Despite the positive start to the year, however, Elliott said companies remain concerned about the future, notably higher raw material costs and the ongoing uncertainty over Brexit. While CIA welcomed the UK government’s announcement on May 17 of a new package of measures to support the development of shale gas, Elliott said the country needs a national strategy on energy and feedstocks to attract investment.
On Brexit, Elliott said the association has long repeated its concerns that the lack of certainty could not just freeze future investment levels but start to contribute to a decline. In a message to UK and EU negotiators, he said: “You have a little time to get the future sorted, but not long. Businesses will not wait forever to make investment decisions.” The UK is set to leave the EU on Mar. 29, 2019.