At the time of writing there is still no clear direction on Brexit, including continued confusion on whether there will even be a Brexit. Whatever the outcome, there is one thing we can be clear on: UK businesses need to export more.
The success of UK businesses overseas is a critical pillar of the health of the UK economy. Increasing exports is essential to improve our balance of payments. According to the ONS’s latest figures, this deficit is currently running at the equivalent of 5% of UK GDP. The Department for International Trade’s (DIT) recently announced Export Strategy set the bold target of increasing exports by this same figure of 5%, from 30% to 35% of GDP. All of us - UK Government, trade associations and business - now need to follow up this target with action.
The main obstacle to growing exports is persuading UK businesses to look beyond our borders and their comfort zones. DIT research shows that almost 500,000 UK businesses, who self-classify themselves as potentially able to export, don’t do so. This begs the question - why not? There are fundamentally two main reasons.
Firstly, some have good margins and growth from their UK operations and feel that there is no need to look to markets elsewhere. Secondly, there is a fear of the unknown. Exports bring with them new risks that need to be understood, otherwise costly mistakes can be made. Risks such as foreign exchange rate fluctuations, payment risk, access to finance, differing legal frameworks and cultural differences can all make exports look daunting to the uninitiated.
However, these risks are all surmountable. Learning to understand and manage these risks will help to grow and develop UK businesses. The new Export Strategy aims to provide assistance in overcoming these risks, but it is in its infancy. BExA, as the only trade association exclusively championing the needs of UK exporters, has been working with DIT to shape the Export Strategy to ensure our businesses get the help they need to succeed overseas. This includes work to assist exporters in accessing new markets, and export finance solutions through UK Export Finance, and support through our membership network.
The UK Government clearly has a number of conflicting priorities at the moment, so it is a mistake to simply wait for DIT to implement the Export Strategy: we need to work together to achieve its aims and we need more businesses to get involved to ensure they have their voices heard.