by Dr Adam Marshall, Director of Policy, BCC
Global trade is vital to the UK. If we are to retain our place at the economic top table, we must create more goods and services that the rest of the world wants to buy, and export more of what we already produce. According to a recent BCC survey of 500 manufacturing companies, 27 percent said they did not export at all. This suggests that many businesses are not spending enough time and effort developing new products, adapting existing products for export, or scoping out potential new markets for their goods.
Both business and Government are in agreement that any successful recovery in the UK will have to be export-led, but this will only happen if the number of companies that export increases. British companies must become more adept at selling their goods abroad – not just in Europe, but into high growth developing markets such as India, China and Brazil.
But it is not solely the responsibility of businesses themselves to get British exports booming. The Government too has a very important role to play. Services provided by the British trade promotion agency, UK Trade and Investment (UKTI) need to be better matched to the needs of small-and medium-sized companies and measured by real results on the ground, rather than the number of companies contacted or the number of charged-for reports sold. Trade promotion, whether run by UKTI or others must also be regarded as an essential expenditure – much like the NHS – rather than simply a ‘nice to have’.
A barrier companies often face when trying to export their goods is the right access to trade finance. The UK Government provides very little in the way of state-backed export trade finance or trade credit insurance compared to all of Britain’s major competitors. Exporters often rely on this support, as exporting can be high-risk for many businesses, especially small- and medium-sized firms. Our research has shown that even before the recession, British companies suffered from a structural disadvantage when attempting to access state-backed trade finance and insurance support for high-value high-growth developing markets, considered by the private insurance market as too risky.
We believe that the Government should create a state-backed export trade credit insurance scheme and a range of other trade finance products where the private market is not serving UK exporters – and then share both the risk and profits. Both France and Germany have successfully applied this model, with benefits for exporters and their respective exchequers. Such a model would mean that exporters could continue to do business in emerging markets, especially during periods of recession or economic uncertainty.
We welcome the appointment of the Government’s new trade minister, Stephen Green, who will play a critical role in helping to open new markets for our exporters. But there is still more to do. Firstly, the Government must revise the new Bribery Act to ensure it does not stop first-time exporters in their track with large amounts of new red tape. Secondly, the Export Credits Guarantee Department and UKTI will require reforms to offer maximum, not minimum, levels of support for SME exporters. And finally businesses need to help businesses, with experienced exporters helping first timers get into the game. All along the way, Chambers of Commerce will be there to help.