The UK is suffering the slowest recovery of any major economy, with order volumes down by half compared to pre-pandemic levels, according to new data from Tradeshift, the B2B digital network facilitating trade transactions between buyers and suppliers globally.
Tradeshift’s quarterly Index of Global Trade Health examines business-to-business transactions (purchase orders from buyers and invoices from suppliers) submitted through the Tradeshift platform. This quarter’s report sees the debut of an enhanced index model which tracks quarterly trade volumes against previous years. The Index uses a baseline score of 100; a reading above 100 indicates above-trend growth against medium-term, seasonal trends while below 100 indicates below-trend growth.
The Q3 Index data provides grim reading for the UK economy with an index score of 52, indicating a mountain to climb before trade activity growth in the UK begins to normalise against the pre-pandemic range.
There was at least some cause for encouragement. Total transaction volumes rose above the expected range for the first time in 2021 following a 30 point upswing in activity compared to the previous quarter. But this growth is coming from a very low base of activity. Tradeshift’s data shows the UK was the worst-performing major economy, with trade activity lower than the US (Index score of 98), China (96), Eurozone (82) and the global average (72).
“The UK faces a unique set of circumstances and recovery was never going to be easy,” said Christian Lanng, co-founder and CEO of Tradeshift. “It was one of the countries worst hit by the pandemic, and in January pushed ahead with a Hard Brexit, placing supply chains under added pressure.
Globally, Tradeshift’s data suggests that suppliers are struggling to fulfill a huge backlog of orders following a prolonged spike in demand as economies have reopened. Total invoice volumes, which indicate how quickly suppliers are able to fulfill orders, climbed by a slower than expected 5 points and remain 31 points below the pre-pandemic forecast range.
“Resilience has become the number one conversation in board rooms, but we need to stop thinking about supply chains as individual fiefdoms and start looking at each supply chain as part of a richer ecosystem,” continued Lanng.
“Technology that connects buyers and suppliers more dynamically can help alleviate pressure that builds during volatility cycles. Areas where I see huge potential include digitized financing, which unlocks trapped working capital so that suppliers are incentivized to hold more inventory, and online marketplaces capable of intelligently pooling supply chain capacity and matching it to areas of high demand.”