By Ana Buisán of Banco de España and David Learmonth and María Sebastiá-Barriel of the Bank of England's Monetary Analysis Division.
The United Kingdom's export market share has declined steadily for a number of years, both in aggregate and in many industries within the manufacturing sector. A major determinant of demand for an industry's exports is the price of those exports relative to the prices of international competitors. This article shows that UK export prices tend to follow the prices set by foreign competitors quite closely, when expressed in a common currency. So, for many exporters, a dominant depressing influence on market share over the past decade was the significant appreciation of the sterling exchange rate in the late 1990s. But other factors also played a role. In particular, a number of high-tech UK industries have been able to increase their market shares, perhaps reflecting a greater ability to differentiate their products from those of their competitors.