Regional Insights from UK & Europe, March 2021
Spring is here bringing spectacular daffodils and a loosening of covid-related restrictions. Schools are back and small gatherings are allowed outside now but realistically it will be June before we are allowed to socialise in groups inside, ironically just as the sun comes out!
The impact of Brexit for business is reflected this month in a continued drop in shipments between the UK and the EU. Business leaders attribute this trend to a number of factors: British businesses stockpiling inventory before the UK left the EU, the difficulty in navigating the post-Brexit paperwork needed and also changing official advice.
British exports to the EU year on year dropped 38%, and its exports to the rest of the world were down 7.5%. At the same time, Britain imported fewer goods. Imports from the EU were down almost 16% and those from the rest of the world dropped more than 9%. Despite these challenges, the UK is definitely open for business, and continues to proactively work with other exporting nations even as friction in cross-border commerce increases.
Although business leaders in the UK anticipate continuing instability between the UK and the EU in the months ahead, this environment also creates increased opportunities for NZ businesses across sectors to seek opportunities and market share.
Where are we spending (UK Focus):
Overall consumer spending contracted by 13.8% in February as national lockdowns continue, but we are seeing some signs of recovery compared with January as essential spending increases. This has been driven by strong spend in supermarkets and record year on year spend growth at food & drink specialist stores. Overall there has been a 14% increase on retail spending in February vs January, driven by a 21% increase in grocery and general household spend seeing a 10% increase. Retailers with a considered online presence benefitted from a 43.3% increase in sales.
Food & drink specialists, electronics, Home & DIY improvements are leading the charge as the nation gets ready for spring. Digital content & subscriptions are still driving steady growth at 42.6%, while the hospitality, travel and leisure industries unsurprisingly continue to see negative growth. As we all still remain at home, takeaway food delivery apps continue to benefit and online eating and drinking spend grew by 92.6%.
We take delight in seeing those septuagenarians and above strutting the streets with a skip in their step and a smile in their eyes, as the vaccine roll out continues with great success. There’s a real sense of optimism with longer days and the knowledge that more and more people each day are protecting themselves and their loved ones by taking the vaccine.