As the Coronavirus crisis is progressing, the Spanish Chamber of Commerce in the United Kingdom has continued to analyse the existing exposures for trade between Spain and the United Kingdom. The initial impacts that have affected trade are now developing onto domestic economic impacts in both countries that are directly linked to this global crisis. As a consequence, economic activity and trade models that were previously forecasted have suffered a tremendous impact that will continue to change in the upcoming months with an unknown outcome.
It is important to think about the products that the United Kingdom demands the most from Spain. In a previous analysis, industries such as automotive, chemical components, consumer goods, food and drink, were identified as the most demanded ones by the British market.
If we look at the data regarding consumer confidence in the UK, it has experienced a considerable decrease in the last month, with the forecast in March 2020 having decreased by 9 points after a consolidated growing trend that it had been experiencing for the last months[1]. The 2020-2021 forecast is also expected to decline, along with other macroeconomic data.
It seems clear that there will be a considerable impact in the economic context and, hence, in trade, but the demand of certain industries looks stable and even increasing, being the case of certain food and drink products. Even that industrial activity is not exclusive to the trade relation between Spain and the United Kingdom, it represents an important part of it. Furthermore, as we previously stated in another article, there is a factor of dependence of the UK market with regards to some of these products, with import rates, for instance, of 100% in the case of oranges; 80% in tomatoes; and almost 70% in apples[2].
Apart from that, the geographical proximity of the European continent and Spain has increased that dependency for certain products, especially at this time when efficiency and quick delivery of merchandise is a must.
With this context in mind, we are aware of the existing difficulties for trade and economic activity with the measures taken in both countries, but we encourage companies to keep themselves up to date with issues that were previously expected to impact on their business, being Brexit one of the most relevant ones.
Despite the transition period that is in force until December 31st 2020, if no change in the calendar, the understanding of the post-Brexit situation is vital for those companies that have economic interested in both countries.
That is why, the Foreign Trade team of the Spanish Chamber of Commerce in the United Kingdom, as well as its whole staff, are working on keeping all the relevant information up to date. If you have any specific question for your company or organisation, do not hesitate to contact me on the following email address: alberto.oliva@spanishchamber.co.uk
[1] CEIC Data, March 2020. Available here: www.ceicdata.com/en/united-kingdom/consumer-confidence-gfk/consumer-confidence-overall-index
[2] Revista Mercados, January 2020. Available here: www.revistamercados.com/articulo/ofrecemos-confianza-y-conocimiento-del-mercado-en-el-contexto-del-brexit/