The UK’s exports of goods to the rest of the EU is a little under 10% of our total output. That means that if, for example, there is an EU recession and we lose 10% of that business as a result, the UK economy will lose just 1% of output. At a time of little or no growth that is not helpful. It compares with the government forecasts of Uk growth averaging over 2% per annum.
However, at the same time the emerging market economies are likely to grow at a decent pace. The UK sells too little there at the moment. Exploiting the growth in those economies, and building up our low market share, we could offset a possible 10% fall in EU exports by a compensatory increase in non EU exports. The government is rightly seeking to help companies export to these faster growing markets. This will be an urgent priority not just for the next year but for the next decade, as the Euro scheme and banking problems in Western Europe damage its prospects.
There is also considerable scope to replace imports with home manufactures and services. That too could offset any loss of output from Euroland contraction. All these routes would be helped by the actions to promote UK growth we have often discussed here.