It’s pretty stormy on the export front, according the latest DHL/BCC Trade Confidence Index, (a survey of more than 1,000 exporters). Not only did growth tail off at the close of 2011, but the Index forecasts a bleak outlook for domestic and international trade activity in 2012.

Manufacturing has proved the most resilient industry, reporting a 2% increase in Q4 orders, up from a 2% decrease in Q3. UK widget-makers are also feeling more upbeat than they were in the middle of 2011. Their profitability confidence is up, with firms predicting a 36% increase in earnings, up from the 32% forecast in the previous three months.

Elsewhere in the exporting game, however, spirits are low. Six months into last year, 50% of firms felt confident of increasing profitability, but this falls to 48% in Q3, and now just 43% in the final quarter. Unsurprisingly then, the vast majority of UK exporters are looking to save any spare cash rather than investing in new plant and machinery (72% have frozen budgets) or training (only 12% are investing in skills). Many firms have also shelved any hiring plans, with just a fifth of exporters on the hunt for new staff.

So what’s eating away at UK export? Inflation remains a huge concern for exporting businesses, despite the recent 0.4% drop. And the cost of energy, fuel, and raw materials has been an ongoing cause of strife, not to mention volatility in the exchange rates - 37% of exporters are finding the strength of sterling a bother. Taxation has also been cited as a key barrier to growth. All in all, it’s a perfect storm.

It’s not all bad, however. As Phil Couchman, CEO of DHL Express UK and Ireland, points out: ‘Factors such as a flat base rate and government making the UK a leading offshore trading centre for the Renminbi could give UK businesses a competitive advantage.’

And there are a lot of clever businesses that are circumventing the currency issues by looking beyond the eurozone. Couchman says: ‘An increasing number of UK exporters are seeing flourishing e-commerce sales to the continent and further afield, specifically Australia – as disposable income and favourable exchange rates across the Pacific create inroads for British goods. With our pre-existing markets struggling, it’s essential that exporters set their sights on new faster-growing trade partners.’

So there are a few good news stories out there. Nevertheless, a little joy on the eurozone front would help matters enormously. Over to you, Merkozy et al…

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