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UK eyes new export markets with revamped strategy and £1tn target

The UK government has unveiled its updated export strategy, reviving a pledge to increase the country’s annual exports to £1tn and emphasising the need to boost sales beyond European markets. 

The strategy, published today by the Department of International Trade (DIT), aims to provide practical assistance and information to companies exporting goods and services – or considering doing so – backed up by financial support. 

UK exports totalled £600bn in 2020, but only around a tenth of businesses currently export, DIT says. That is despite research suggesting businesses that export are more productive and pay higher wages. 

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The strategy says current projections estimate the UK’s exports will total £1tn per year by the mid-2030s, but that the country “can get there faster if we work together”. 

Anne-Marie Trevelyan, secretary of state for international trade, says: “I want us to hit that mark before then. I want us to be audacious and to aim for the end of the decade – not as a target, but as a goal.” 

The government has previously faced criticism for framing export targets as a percentage of national GDP. A review earlier this year by the National Audit Office (NAO), an independent public spending watchdog, added that the lack of any stated timeframe has made it “difficult to hold DIT accountable for its progress”. 

The £1tn ambition revives a target set by the government in 2012 by then-Prime Minister David Cameron, but that was never reached. 

Since then, the strategy says rapid economic growth in non-European markets “is shifting the world’s centre of economic gravity eastwards”, with certain Asia Pacific markets – including China, India and Indonesia – expected to increase their demand for imports significantly over the next 20 years. 

“The most successful exporting nations will need to create and sustain market share in these economies,” the strategy says. “Our assessments show that the UK’s comparative advantage in exporting high quality goods and services is particularly adapted to exploiting these markets.” 

To achieve this aim, the export strategy sets out a series of practical measures, including an expansion of DIT’s Export Support Service. 

The service, which was launched last month, provides the department’s “first ever end-to-end service to support businesses exporting to Europe”, it says. Backed by £45mn in funding, the service will now be expanded to cover all markets. 

DIT is also expanding the reach of its Export Academy, a free programme targeting small businesses, while piloting a UK-focused trade show programme and extending networking opportunities with successful exporters. 

In terms of finance, the strategy says support will continue to be provided through the European Regional Development Fund, an EU initiative that is still active in the UK – though a December 2020 government report noted the fund “represents a very small proportion of public funding available in England to support growth”. 

Further ahead, it says £23mn has been “set aside” to support exporters in 2022, and that the government is “considering how best to enhance our support offer from 2023 onwards”. 

The strategy hails policy changes at UK Export Finance (UKEF), the country’s export credit agency, that were announced earlier this week. 

UKEF’s export development guarantee is being expanded to support businesses “that don’t currently export but have huge export potential”, including those not yet based in the country, it said in an announcement on Monday. 

The agency will also offer the guarantee on extended repayment terms to “green economy exporters who need to access significant working capital to grow their businesses”. 

Other reforms include changes to UKEF’s bills and notes guarantee to ensure exporters are paid immediately, targeted chiefly at producers of heavy goods such as machinery, and an expansion of its range of partner financial institutions to include challenger banks and alternative lenders. 

 

‘Ambitious but possible’ 

Marco Forgione, director general of the Institute of Export & International Trade (IOE&IT), welcomed the strategy’s increased focus on markets outside Europe. 

“None of that is done on a whim,” he tells GTR. “The reality is the fast-growing economies and the largest generators of wealth are in Asia, and there are also generators of growth and development in Africa. It’s clear that there is massive potential for UK businesses in those regions.” 

But for Emily Thornberry, shadow secretary of state for international trade, there remain concerns over progress in negotiating fresh post-Brexit trade agreements. 

“So far in 2021/22, we’ve seen a belated rollover deal signed with Serbia in April, and a revised deal signed with Norway, Iceland and Liechtenstein in July. That’s it,” she wrote on Twitter following the strategy’s publication. 

“Not a single trade agreement has been signed since we left the EU that we didn’t already have inside the EU.” 

The Institute of Directors, a London-based association of company leaders, warns that EU member states “must not be overlooked in our future trade policy”. 

“They remain our largest export markets. While there is significant potential for trade activity in the wider world, the government must secure a pragmatic solution to the challenges of exporting to the EU. Only then will UK exporting be able to realise its full potential,” the institute says. 

More broadly, however, the British Exporters Association (BExA) says it sees the export strategy’s targets as “ambitious but possible”. 

We need to ensure things are done differently to avoid missing the targets, and hopefully to exceed them,” BExA co-chair Geoffrey de Mowbray tells GTR 

“Businesses need to be fearless in their export ambitions. To do this they will need continued, world-leading support from government and financial institutions.” 

IOE&IT’s Forgione calls for continued focus on practical training, advice and guidance for exporters, particularly at the smaller end of the market, in order to reach the £1tn export target – an “important marker” for UK firms. 

“There has historically been a reticence to engage with exporting among those organisations, and it’s often just nervousness around not really knowing what’s involved,” he says. 

“I would encourage government to provide more of that direct support, including direct intervention, to help businesses understand the processes and procedures around doing international trade. Once those are in place, in reality, most businesses will continue exporting the same things again and again.” 

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