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UK-Austria Trade News

27. February 2012

The United Kingdom is one of Austria’s major trading partners. The UK is Austria’s eighth largest export destination and fourth largest export market for services. In this article we aim to explain how trade between the two countries is developing and what trends can be observed.

Having developed exceptionally well until the global financial crisis, the commercial relationship with the UK was hit hard until the end of 2009 (up to minus 25 per cent) due to general international economic difficulties. Since 2010, a positive trend can be observed, continuing in 2011. Austrian exports in 2010 amounted to a total of € 3.3bn, while British exports to Austria accounted for € 1.72bn. From January to July 2011, Austrian exports increased by 17.61 per cent, British exports to Austria by 16.74 per cent. In 2010, almost all sectors improved – especially the Austrian exports of pharmaceuticals and medicines, cars, soft drinks, paper, hinges and fittings, aluminum structures, wood products, rail vehicles, electrical appliances and switches, engines, road vehicles, lighting devices and sound storage mediums. The British exports could not benefit as much as expected from the fallen value of the British Pound. On the British side, a strong increase of fuel deliveries are recorded, but also good developments in cars, computer equipment, machines, chemical products, dyes and plastics, various metal products as well as medical and surgical equipment and instrumentation.

Of great importance is the exchange of services, and this includes not just tourism. In 2010, total sales in the exchange of services accounted for € 2.9bn; Austrian exports of services amounted to € 1.6bn, a decrease of 0.5 per cent compared to last year. About a third of these "exports" are revenues of tourism. The number of arrivals and overnight stays of British tourists declined during the global financial crisis. In 2010, an increase of 4.2 % could be recorded in arrivals, the overnight stays decreased again by 0.5 per cent (against a loss of 7.7 per cent in 2009). In the services sector, Austria generated a surplus of € 355m.

In terms of bilateral trade, the products exchanged in both directions are very similar and are typical for highly developed nations. Product groups with a high technological standard dominate the trade, like mechanical engineering and motor vehicles, followed by manufactured goods, finished goods and chemical products. Austria recorded a substantial positive trade surplus over recent years. The trade surplus reached 839 million Euro in the first half of 2011.

The level of direct investment indicates the close economic ties between the two countries. The capital stock of Austrian direct investment in the UK amounted to €4.1bn. There are currently around 230 Austrian-owned subsidiaries in Britain, employing over 17,200 people. In 2010, the UK has been the biggest inward investor in Austria, with investments amounting to € 4.02bn.

The UK economy is currently the sixth largest in the world, the service sector being the dominant sector of the British economy. The balance of trade in 2010 was in favour of Austria, however, at €1.6bn. International demand is set to increase for niche, technologically advanced products in the following sectors: environmental technology, renewable energies, modern construction technologies, measurement und testing instruments, security technologies, medical technologies as well as upscale design products. The concept of sustainability looms large by now; products which are conducive to Low Carbon Economy have better chances.

For more detailed information about the Austrian economy and bilateral trade between Austria and the UK, as well as business opportunities, please get in touch.

Source: AWO Economy Report: www.wko.at/awo/uk

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