BMI View: We have adjusted down our trade forecasts for the UK following the Brexit vote, in line with a
downgrade of our expectations for the overall macro outlook. The main transmission mechanism within our
five-year forecast period is the FX volatility and stalled economic activity as uncertainty persists. More
pronounced or structural effects on trade of the actual disengagement of the UK from the European Union
will be reflected in the next decade. Rail freight will go in structural decline in terms of volumes carried as
the phasing out of coal power capacity hits its main commodity. Road freight volumes growth will soften as
oil price increase in coming years raise costs of transport.
Total Trade: We have downgraded our forecasts for UK real trade growth of 0.5% in 2017 and 0.8% in
2018 to 0.5% and 0.8%, from 3.0% and 2.8% previously. The downgrade reflects of our expectations of
slowing macroeconomic activity both in the UK and Europe, with the lead-up to Brexit playing a part in
trade slowdown, but not the sole factor.
Road freight: We have kept the growth forecasts steady and note a slight contraction in volumes carried via
heavy goods vehicles (HGV) in the coming years as fuel prices edge higher, increasing transport costs. e-
Commerce has been responsible for the steady growth of road freight, so any decline in consumer spending
would take a toll on the volumes carried.