UK exports could receive a £21 billion boost over the next five years due to the success of theLondon 2012 Olympic and Paralympic Games, according to a study by UPS and the Centre for Economics
and Business Research covering senior business leaders at 500 multinational corporations around theworld.Supported by economic modelling and further opinion research among 962 UK exporters, the studyreveals that London 2012 has given the UK a major reputation boost among multinational businessleaders. Four-fifths (80%) of multinational companies included in the survey currently buy goodsand services from UK businesses, and almost three-quarters (70%) of these reported that London 2012had made them more inclined to source UK exports. This rises to 90% of European multinationals, and80% of Asian firms included in the study.
If MNCs currently trading with UK businesses follow through with these intentions, the studyforecasts that London 2012 will drive an increase in UK exports worth £15 billion between 2013 and2017. In addition, 10% of MNCs included in the study do not currently source goods or services fromthe UK, but report they are now more inclined to do so. If UK exporters were able to capitalise onthis interest, this would unlock a further £6 billion in export revenues.
The study also reveals that the timing of this Olympics-driven demand differs around the world.The ‘Olympics effect’ is strongest in 2013 in Europe and the Americas, while 2017 is when London2012-driven demand is expected to peak in Asia.
More than four-fifths of international business leaders surveyed believe that London 2012 hadprovided an excellent showcase for the UK’s contribution to the world (83%) and for its businesscapabilities (82%), with more than three-quarters (78%) admitting that it had changed theirperception of the UK as a place to do business and nearly three-quarters (72%) believing thatLondon 2012 had boosted Britain’s credibility as a supplier (72%).
UK exporters surveyed appear equally upbeat about the potential effect of London 2012 on theirinternational sales. More than two thirds (68%) expect the Games to have a positive impact onexport opportunities for their company in the long term. Around two-thirds of companies inLondon (65%) and southern England (68%) expect an increase in export opportunities as a result ofLondon 2012. Moving further away from London, this dips to 38% of firms across the central band ofthe Midlands, East Anglia and Wales, but jumps to 86% of companies in northern England and 78% offirms in Scotland.
Cindy Miller, managing director at UPS UK, Ireland & Nordics, commented: “The legacy of theLondon 2012 Olympic and Paralympic Games will run much deeper than simply sport, as we witness apositive impact on the overseas reputation of UK commerce and industry. In a difficult globalmarketplace, a projected uplift in international sales would represent a welcome boost for UKexporters.”
The direct effects of the Games were estimated to have contributed around half a percentagepoint to the 1% growth in UK third-quarter GDP, helping lift the UK out of the second dip of adouble-dip recession, following two quarters of consecutive decline. However, the latest Bank ofEngland statement warns of a possible slide back into negative territory in the fourth quarter, inpart because due to the tough comparison with the Olympics-boosted third quarter.
But on the export side, UK businesses have reported sustained growth during the last threequarters, according to DHL’s latest Trade Confidence Index, established in partnership with theBritish Chambers of Commerce (BCI) and based on a survey of 1,500 British exporters. Although theindex for export sales levels in the third quarter was lower than in the preceding quarter, itremained clearly in positive territory, with significantly more companies experiencing exportgrowth than reported a drop in sales.
Exporters of services fared better than exporters of manufactured goods, where there was asignificant drop in the number of companies reporting export growth, compared with the previousquarter. Exporters’ concerns included cashflow, cost pressures and employment – although worriesover a previous area of concern, exchange rates, eased in the third quarter, according to thesurvey.
Despite the challenge of continuing global uncertainties, DHL and BCC said exporters of goodsand services remained confident about increasing turnover and profitability over the next 12months, with the balance of companies expecting export growth over the next 12 months improvingcompared with the previous quarter – in particular for manufacturing exporters, with micro andsmaller businesses feeling this more than their larger counterparts.
BCC director John Longworth observed that the latest trade figures from the UK Office forNational Statistics (ONS) showed that UK exports to non-EU countries had grown to be larger thanexports to the EU “for the first time in many years”, increasingly breaking into new markets andexpanding their presence in countries like China, India and Brazil. Longworth commented: “Thelong-awaited re-balancing of the UK export sector, towards the faster-growing economies of thedeveloping world now seems well and truly underway.”
ONS figures indicate that the volume of exports of goods, excluding oil and erratic items, was4.1% higher in Q3, 2012 compared with the preceding three months. The volume of imports fell 0.3%over the same period.
