Export Week, which starts today – with five days of events for businesses all over the UK – shines a spotlight on the UK government’s ambitious target to double exports to GBP1 trillion by 2020.
Unfortunately overall progress has been slow. Last week’s official figures showed weakening exports to the UK’s biggest market, the euro area, and a widening trade deficit.
To get anywhere near the target, the public and private sector need to step up their efforts.
I see at least five areas that must be addressed, if UK trade is to take off, making a neat acrostic: Targeted approach, Risk, Access to finance, Deals and Emerging markets.
Trade Minister Lord Livingston has recognised that, to boost exports, the government has to focus its efforts on the UK’s 8,900 mid-sized businesses – companies on the verge of international expansion, each with hundreds of employees. We can learn a lot from Germany with its flourishing pool of mid-sized companies, the successful ‘Mittelstand’ model.
“UK SMEs face a challenge in accessing finance to help them export, and the government and banking sector can both play a role in fixing this”
Companies, particularly smaller ones, need to understand the risks before trading with other countries, ranging from commercial risk to geo-political and security risks. Large corporates with experience of foreign trade can help small businesses with this by sharing their knowledge. Standard Chartered, for example, has held workshops for UK small and medium-sized entreprises (SMEs) interested in exporting to India, helping to create more awareness about the challenges and opportunities of trading internationally.
Access to finance
UK SMEs face a challenge in accessing finance to help them export, and the government and banking sector can both play a role in fixing this. The export promotion agency, UKEF, is boosting its activity, recently rolling out the Direct Lending Scheme to help UK exporters, but more can be done. Again much can be learnt from other countries with well-oiled export credit agencies, such as the Export-Import Bank of India and the Export-Import Bank in the US.
“TTIP is a big opportunity for the UK and the rest of Europe to boost trade”
While the Doha trade-negotiation round of the World Trade Organization has stalled, the UK and other governments must redouble their support for some of the multilateral trade deals being negotiated. The EU has already concluded a number of trade deals, such as with Korea and South Africa, and has several more in the pipeline with key countries in Asia, such as India and Singapore, as well as a large trade deal with the US, the Transatlantic Trade Investment Partnership (TTIP). TTIP is a big opportunity for the UK and the rest of Europe to boost trade, with a potential value of GBP10 billion to the UK economy alone.
UK exports are worth around GBP300 billion, but not enough of the country’s trade is with emerging markets. The global economy is undergoing massive changes, with countries in Asia, Africa and Latin America growing much faster than the US and Europe. The UK needs to step up its trading relationship with the likes of India and China. Progress has been made, but it is galling to note that UK exports to China were worth just USD10.1billion last year, compared with Germany’s USD73.4billion.
As a relative newcomer to the UK, it’s obvious to me that the country has some tremendous advantages on the international economic stage.
People forget that the UK is the second largest outward investor in the world (behind the US), and Export Week is another opportunity in the long-term goal of becoming experts in exports.