A new export strategy from the UK government aims to boost total exports to 35% as a proportion of GDP.
The new plans aim to ‘make Britain a 21st century exporting superpower’ after extensive consultation with local businesses across sectors. Plans also set out targets to increase productivity, wages and job security.
International Trade Secretary, Liam Fox announced the plans to increase exports through better use of the UK’s overseas network, new online technologies and growing an extensive B2B network.
Fox noted that: “The United Kingdom is a great exporting nation and our exporters lead the way, in creating jobs, raising wages and growing our economy.
“UK businesses are superbly placed to capitalise on the rapid changes in the global economic environment and I believe the UK has the potential to be a 21st century exporting superpower.
As an international economic department, we are determined to support, connect and grow UK companies on the world stage through our international network.
“As we leave the EU, we must set our sights high and that is just what this Export Strategy will help us achieve.”
UK exports already reached record levels last year with £620 billion of goods and services sold abroad by British firms, accounting for 30% of GDP. And whilst research indicates that businesses that do sell abroad have higher growth potential, around 400,000 local companies don’t export even though they suggest themselves that the opportunity to do so is available.
This new export strategy looks to address this, as well as boosting export opportunities for Uk forms of all sizes, by producing smarter and more bespoke support solutions. Four primary strategies include:
- Encouraging and inspiring more companies to export, in part by promoting local success stories and facilitating peer-to-peer learning
- Providing practical advice and assistance on exporting, partly through digital enhancement of the great.gov.uk platform and potential financial incentives to further encourage export start-ups
- Connecting British businesses to international markets and buyers, as well as tariff support
- Raising awareness of the up to £50bn in export finance and insurance support available through UK Export Finance
Director general of the Institute of Directors, Stephen Martin, commented on the new export strategy: “Maximising trade opportunities across the globe will be key to the UK’s future economic success, so we welcome this new export strategy, which provides a solid foundation upon which to build.
“The government deserves credit for investing time and effort in working with business to draw up this strategy, and we are delighted that a number of the IoD’s recommendations have been incorporated.
“Improving the UK’s export performance will depend upon many variables, but the good news is that there is plenty that can be done now to help businesses, irrespective of Brexit.
“We will be encouraging our members to engage with government to make sure this strategy really takes off and enables British firms to realise their full trading potential.”
Over 5,000 UK companies paused exporting plans in 2016 as a result of the Brexit referendum result.
That’s according to research released last month by academics at Cambridge, whose report also suggested that nearly 4,000 companies actively stopped exporting over uncertainty surrounding future trade rules and border taxes.
Academics Meredith Crowley, Oliver Exton and Lu Han predict that the resultant pause or cease of export activity from the combined 9,000 firms took 1% off Britain’s exports for the year, more concerning with the potential for those exporters to have become major international sellers as new markets and agreements were explored.
“We estimate that the decline in entry reduced the value of exports by between £226m and £1.4bn in 2016, a small total value relative to total exports to the EU in 2016 of £140bn.”
How to balance Brexit export fears with growth plans
The big question facing UK companies that are either planning to start selling abroad or already current are is, what do we do next?
With the torrid nature of current negotiations taking place in Brussels and the various levels of hard and soft Brexit’s potentially on offer, you can see where the 9,000 businesses deciding to retain what they have instead of pushing for international growth are coming from.
There are three potential trains of thought that business heads can ponder;
- Retreat and retain
- Keep calm and carry on
- Accelerate global growth plans
Retreat for the businesses noted in the Cambridge report was the clearly the winning (whilst losing) option on the table.
What business owners need to remember is that the EU want a deal, and EU businesses want to trade with UK companies. Only last month we wrote about another report highlighting how demand for British food and drinks products are surging – up 10% in just 12 months.
For those leaning towards the keeping calm and pressing on line of thinking, it’s also worth noting that total exports last year reached a record £616bn. If your competitors are losing their nerve and leaving the export market, particularly within the EU block, that’s one huge opportunity just waiting for you to sweep in and take.
And for ambitious firms looking to grow through the potential pot-holed road ahead, British exports to non-EU states are on the rise and demand is growing, with International Trade Secretary Liam Fox noting that: “British goods remain in global demand as exports to non-EU countries continue to grow.
“It shows the confidence the world has in our goods and is important as 90% of growth in global trade will come from outside the EU.”
Getting the right support
There is no doubt about it, BREXIT is going to be a challenge for all EU companies that export either from the UK or into the UK. The simplicity of the Single Market and Customs Union has been taken for granted and there is a generation of business people out there which has never experienced the headaches of customs declarations, duties, VAT payable on import, deferment numbers, apostilles, Chamber of Commerce attestations.
Go Exporting’s Brexit consultancy can help you navigate the minefield. Find out more about our Brexit consultancy.
The UK’s global exports reached a record £616bn last year with both goods and services seeing marked growth.
Exports to non-EU countries in 2017 were valued a £342bn, 55% of total export value, with £274bn in EU exports.
Good exports soared 13% to £339bn over the year, whilst services increased 7% to £277bn.
Interestingly, key growth markets for UK exporters since the turn of the decade include Macedonia, up 318% to a value of £1bn, and Kazakhstan by over 200% to £2bn. The fastest growth market was Oman where exports have increased by over 350% to £3bn since 2010.
Nearly one-fifth of all exports were sold to the US.
Data from the Office for National Statistics highlight an overall trade deficit of £25.8bn (reduced by £5bn) but an increasingly positive picture so far in 2018 with exports growth of 5% in H1 and a service-sector trade surplus of £111bn.
‘British goods remain in global demand as exports to non-EU countries continue to grow’
International Trade Secretary, Liam Fox, said that: “British goods remain in global demand as exports to non-EU countries continue to grow.
“It shows the confidence the world has in our goods and is important as 90% of growth in global trade will come from outside the EU.
“As an international economic department, we have a dynamic and experienced team who will negotiate free trade deals and make a success of Brexit.
“We’re also supporting UK businesses in exporting more and talking to international businesses on why we should be the top destination for investment.”
Nagging Brexit Uncertainty
But despite UK export performance over the last 18 months defying expectations, Fox noted Brexit and a potential no-deal scenario still looms large.
“I think the intransigence of the commission is pushing us towards no deal.
“We have set out the basis in which a deal can happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic well-being of the people of Europe then it’s a bureaucrats’ Brexit – not a people’s Brexit – then there is only going to be one outcome.
“It’s up to the EU27 to determine whether they want the EU Commission’s ideological purity to be maintained at the expense of their real economies.”
Dragons’ Den presenter and economist Evan Davis says nobody really knows what direction business after Brexit will go and many are still waiting to see what Brexit actually means.
In a radio interview with New Zealand-based NewstalkZB, Davis spoke extensively on Britain’s business uncertainty post-Brexit.
The famed presenter and host of predominantly startup and SME business investment programme Dragons’ Den, the first question put to Davis was; ‘Is Britain an entrepreneurial country’?
“Probably not enough. Where we don’t seem to do so well is building those businesses up to £100 billion values. We create great businesses and then they get sold off.
“There seems to be some gap where we struggle to build up the giant.
“But I will say this. London now is seen as a hub of a lot of entrepreneurial activity, particularly around FinTech because we have the finance. It’s a great place to do business.
Business after Brexit
“Nobody knows how far or in what direction it (business) will change.
“The good news for entrepreneurs with Brexit is that Britain can become more nimble. We can change our rules on driverless car testing and all sorts of things.
“The bad news would be on migration. The degree to which Brexit represented a vote against easy come and go policies. If businesses are trying to get together a group of international staff, that might be a problem.
“And then, of course, we all know in business psychology is important. There’s a feeling among some Europeans that ‘we’re not welcome’. It’s a sort of visceral thing ahead of a rational thing.
“But we’re all agog to see what Brexit actually means!
“What has happened is we’ve encountered quite a lot of difficult problems, including the Irish border problem.
“Britain voted to be more of a nation and set its own rights to set its own product regulations and tariffs and taxes and no border, but then at the same time, we’ve decided we absolutely don’t want a border (in Ireland).
“We’re not much closer to solving the conundrum.
“The British government view and Brexiteer argument was let’s do it (go out and secure trade deals).“
Davis then concluded by noting that, no matter how much lamb and vino could be traded between New Zealand and the UK, it wouldn’t account for the potential lost trade with the EU.
“For some reason, you seem to do a lot more trade with those close to you…”
Listen to the full interview below.
New research has suggested that British businesses are more optimistic about trading with the EU than last year, despite recent stumbling blocks surrounding Brexit.
The survey, conducted annually by OFX, found that 62% of 500 business owners felt confident about doing business outside of the UK, with 46% of SMEs saying Brexit had no effect on their desire to grow through exports in the future.
Just 15% said they were more cautious about international trade.
And it’s not just a thought or feeling, the real-life figures support what SMEs are saying:
47% increase in overseas sales since last year
Average international revenues for businesses top £50,000
21% increase in foreign cash transfers in last year from British SMEs
Eurozone still more popular than commonwealth for exporters
Perhaps the most surprising stats from the research was that the Eurozone is still the preferred trading block for local businesses, despite the slow progress and uncertainty over Brexit negotiations.
45% of those polled said Western Europe is their favoured market, boosted on last year by the securing of a Brexit transition deal to help firms plan ahead in the short to medium term.
And what about US trade after the introduction of Trump’s tariffs? Interest in exporting into our American friends has plummeted, down 26% compared to last year to 36%.
Opinion was split on the value of and optimism towards Commonwealth trade in the future.
FX research director at OFX, Jake Trask said that: “More than a year after Article 50 was triggered, small businesses have learnt to live with Brexit uncertainty, and refuse to let it limit their European ambitions.
“Despite the slow progress of Brexit negotiations, businesses are increasingly optimistic about trade with Western Europe – suggesting a desire to keep calm and carry on with international business, along with a quiet optimism that all will be well.”
SMEs around Britain require more support
What businesses outside of the capital say they need most is international trade consultancy. 50% of companies in Wales said there wasn’t enough export support, whilst only 40% of businesses in Scotland said they felt confident about selling overseas.
But with demand for the British brand so high on the continent, and across the world, small businesses around the UK have so much growth potential if they can bridge the gap between UK-base and international customer.
One growing area in which SMEs are succeeding in this area is e-commerce, with many local firms selling fashion, homewares and software across the world.
One such small firm, menswear brand Tails, does just that. Co-director Joshua Williams noted that: “Today, we make almost all our sales online, with more than half our customers based outside the UK. Local heritage and family history are both central to our brand, and we’re lucky that the internet has made it possible to grow our business abroad without losing our Welsh roots.
Read more: Businesses react to the week in Brexit
“We have sometimes had to travel for specialist guidance, but it’s a minor inconvenience when compared to the huge advantages and quality of life we gain by running our business in Penarth.”
British businesses should leverage their unique heritage and get out there into the world to seek growth opportunities. 53% of local exporting firms say that their ‘Britishness’ is a valuable selling point on the international stage, especially within US, New Zealand, Australian and Russian markets.
If export advice is needed, companies like us at Go Exporting are on-hand to support exporting plans from planning and research to execution.
Find out more about how Go Exporting can help your business here.
They say there’s never a dull week in politics, but it’ll take one heck of a week to top the one we’ve had so far.
Within the last seven days, we’ve had the Chequers agreement, an agreed-upon way forward within the Cabinet. But just days later and we’re listening to a new Brexit secretary and foreign secretary too.
Dominic Raab’s views on human rights and workers rights are well documented, indeed in his own book, but early signs are that business groups are impressed following early meetings with the new man at the spearhead of negotiating the UK’s exit from the EU.
The British Chambers of Commerce, Institute of Directors, Confederation of British Industry and EEF had all woken up the day previous preparing for a meeting with David Davis. But just 24-hours later and it was the new Brexit secretary in front of them discussing the future of the country.
Stephen Martin, director general of the Institute of Directors, said: “It was encouraging to meet the new secretary of state within hours of his appointment, it demonstrates a commitment to engaging with the business community as we approach crunch time in these negotiations.
“The meeting was constructive and we are pleased he is keen to pursue a Brexit that is receptive to the needs of business.
“We are now keen to see the imminent white paper build on the Chequers statement, and look forward to working with the Brexit secretary as negotiations proceed with renewed impetus.”
Another present at the meeting said that: “It was really positive that a new Cabinet secretary kept his commitment with business leaders on his first full day in the role. That is an important statement of intent, in terms of willingness to meet with business and getting the right Brexit deal.”
“The sense was very much one of pragmatism and being signed up to the Chequers approach.”
London more confident in Brexit
New figures published today (Tuesday 10th) also highlight the growing confidence in Brexit from the business community, despite the very recent upheaval in government.
The figures are, for the first time since the referendum result, neutral. The balance of companies in London stating they are optimistic rose 10 points to zero, according to the London Chamber of Commerce and Industry.
Bigger businesses were more confident though, with SMEs still more concerned than not.
And it’s not just businesses which have reported positive outlooks of late. Only last week, BoE governor Mark Carney stated his ‘greater confidence’ that the UK economy will bounce back from a sluggish first quarter, signalling a likely rate rise in the not-so-distant future, but also stimulating a jump in sterling’s value as a result of his speech.
“The incoming data have given me greater confidence that the softness of UK activity in the first quarter was largely due to the weather, not the economic climate,” Carney said, before firing a warning to Trump over trade tariffs.
So, it’s been even by the UK’s political and Brexit standards a crazy week so far, but that doesn’t necessarily mean it’s been a bad one from a business standpoint. Brexit should get moving now the cabinet has a plan in principle, and a warning that deviating from the plan will no longer be tolerated. Perhaps Raab will spend more than the four hours Davis spent directly negotiating with Michel Barnier in the coming weeks alone.
And here’s hoping the new foreign secretary doesn’t have the same ‘f–k business’ attitude as the last one.
A new study has found that Britain’s fastest-growing export partners are Switzerland and China.
The research, commissioned by Wyelands Bank, found that countries in the Asian Pacific dominate the growth charts with Switzerland topping the chart.
Overall, China leads in terms of projected growth with an additional $886m in trade expected on-top of $24.6bn last year, with growth rate forecasts level with Switzerland at 3.6% over the next three years.
Other nations where high export growth is expected through to 2021 include Saudi Arabia, Hong Kong and South Korea.
|Rank (fastest growing)||Country||Growth rate a year to 2021||Value in 2017 (US$)||Project growth (value US$)|
|1||Switzerland||3.6 per cent||$23.6bn||$850m|
|2||China||3.6 per cent||$24.6bn||$886m|
|3||Saudi Arabia||2.9 per cent||$7.8bn||$226m|
|4||Hong Kong||1.2 per cent||$9.1bn||$109m|
|5||South Korea||1.1 per cent||$5.9bn||$65m|
Exports in the top five export growth partnership nations totalled $71bn last year with an additional combined $2.1bn expected to add to that figure, which includes selling both products and exporting services.
UK firms already focusing outside of EU block?
Whilst Europe remains the UK’s primary export partner, totalling 46%, the insight that the Asia Pacific marketplace is growing for British businesses indicates a potentially positive trend ahead of the UK’s exit from the EU.
Increasing trade with what are currently regions which account for a small amount of Britain’s total export value is one of the key aims after Brexit with new trade deals being negotiated. What this research suggests is that Britain’s businesses are already doing it, although further stimulus is certainly required with the second highest expectant growth market, South America, forecast to generate just 0.5% export value growth by 2021.
Commenting on the research, CEO of Wyelands Bank, Iain Hunter said that: “Behind these headline economic figures, trade is important because it creates jobs. It has helped to contribute to the UK’s record employment levels, providing financial security for millions of families up and down the country.
“However, in order for businesses to succeed, they need working capital. It is only by providing better access to funding that we can support businesses to trade, grow and create jobs.”
It seems to be one of the longest running international jokes – Britain has bad food. That thinking may be true with tourists, but for international businesses, demand for British food and beverages is stronger than ever. In fact, global appetite for British food and drink has continued to strengthen by over 10% in under 12 months.
This is according to research by GS1 UK as part of its ‘Brits Abroad: UK Food & Drink Exports 2018’ study. The headline stats from the research are that export of British food and beverages was up 12% in the year to November 2017, with alcohol exports up a very impressive 16%.
And with the British food and drink export market valued at around £22bn, this research indicates an additional £2.6bn in transactions.
A focus on export growth
GS1 UK’s research also indicated that exporting currently comprises a larger proportion of businesses’ overall output and activity than it did half a decade ago, with returns to match. Revenue from exports grew 4% to 15% compared to 2013 for those surveyed, showcasing how a focus on developing export markets can add significant growth to overall takings.
Perhaps the most recognised UK beverage firm taking full advantage of international trade opportunities and marketability of a ‘made in Britain’ tag is Fever-Tree which sells to 60 buyers internationally.
And despite Brexit looming, confidence in exporting remains defiantly positive. In fact, food and drink manufacturers expect export sales to account for nearly a quarter of their business within the next five years. Just one in three said they were concerned that trade with EU partners would stutter as a result of any negotiated trade deal.
Read more: British business beyond the Customs Union
CEO of GS1 UK, Gary Lynch commented that: “British produce remains a byword for excellence around the world and our food and drink is exported to the four corners of the globe.
“With official Government figures showing that £22bn of it was sent overseas in 2017, there is clearly a lasting taste for British products and our members have optimistic expectations for the coming years.
“Whisky and salmon are very much our export staples, but the thirst for our beer and gin also continues to intensify.”
(Photo: Robert Sharp / English PEN)
An end date for a proposed ‘backstop’ plan for trade with the EU following Brexit has been published following a day of political turmoil at Number 10 after crunch meetings between David Davis and Theresa May.
The backstop plan puts in place a proposal for a temporary customs arrangement between the UK and the EU following Brexit in March next year which would see the UK match EU trade tariffs in order to avoid a hard Irish border.
Issues arose in Downing Street on Wednesday after the initial proposals did not include an end-date to such an arrangement, something which many Brexiteers within the party – including Brexit Secretary Davis – were against as it could, in theory, mean the backstop continuing indefinitely until a more permanent arrangement was met.
Given the current pace of negotiations, it’s anyone’s guess as to how long that could have taken.
And despite a hectic day on Thursday in which rumours were circulating in the press that Davis would resign if an end date was not included, the hard work is still to be done as the EU still has to agree to the proposals.
In fact, later on Thursday, EU chief negotiator Michel Barnier set his criteria on which the UK’s proposal would be judged, with one EU Brexit negotiator pointing out that ‘a backstop that is temporary is not a backstop – unless a definitive arrangement is the same as the backstop’.
Despite this, the government is confident a permanent future customs arrangement can be agreed upon and put in place by December 2021 at the latest.
Internal politics aside, what’s the big backstop issue?
Two of the biggest issues facing the UK as it leaves the many arrangements and treaties of EU membership is that of borders and trade.
The customs union which all EU states are currently members of allows tariff-free trade and minimal border checks between nations. And whilst leaving the customs union may see the UK subject to similar trading tariffs as the rest of the world doing business with EU member states (negotiations on this front could go on well into the agreed post-Brexit transition period), the most urgent issue is that of a hard border between Northern and the Republic of Ireland.
Read more: British business beyond the customs union
The EU has already created its own backstop proposal which would effectively keep Northern Ireland within the customs union, but this would essentially create a border between Northern Ireland and the rest of the UK in itself – so a counterproposal was created.
This backup counter backstop would see the entire UK aligned with the customs union, should it be required, and match EU tariffs to avoid border checks.
For Brexiteers, having no end date assigned to such agreement was not an option as it would limit the UK’s ability to forge its own independent trade policy, whilst also still residing under the jurisdiction of the European Court of Justice. A potential indefinite delay on the independence those who voted for Brexit wanted and a potentially damaging result for the country as a whole.
Read more: Business department unprepared for Brexit?
So what next on the Brexit rollercoaster? MPs will have another chance to debate the Withdrawal Bill in the Commons, followed by two increasingly vital EU summits later this month and mid-October – the latter seen as the ultimate deadline for the agreement of the divorce terms.
US tariffs on imported steel and aluminium have come into force, affecting EU, Canadian and Mexican markets.
The tariffs, which were originally announced in March this year but delayed in implementation for some US allies, officially came into effect from 1st June with US commerce secretary Wilbur Ross confirming a 25% tariff on steel and 10% on aluminium imports from the EU.
So why has the US President introduced such tariffs? Criticised by some as ‘protectionist’, Trump himself notes a national security rationale behind the call whilst also looking to uphold his presidential campaign promise to restore manufacturing jobs to decaying American steel towns across the so-called ‘rust belt’’ of The States.
In under two decades, some 90,000 American jobs have been lost in the steel and aluminium industries alone as the US made less and imported more. The trade deficit for the US stands at around one to four and the nation currently stands as the world’s biggest importer of steel.
So what will the impact be on UK and EU exporters? Whilst the effect the tariffs will have on local jobs is unclear, the amount of new tax being paid out will be substantial. UK steel exports stand around £360m to the US every year, whilst from the EU, that figure stands at £5.6bn.
And whilst the UK government has said it will ‘continue to work closely with the EU and US administration to achieve a permanent exemption’ and protect UK workers, there will no doubt be some disappointment and worried faces in Downing Street as the UK looks to etch out closer trade ties and some degree of preferential treatment from what will be an increasingly vital trading partner post-Brexit.
Will Trump’s tariffs work against the US in the long-run?
On the face of it, introducing tariffs on steel and aluminium imports seems a clever if not brash move. With such a large trade deficit in this field, the US can expect to rake in hundreds of millions in additional taxes each year before American firms start to source locally once more. The move will also bode well with Trump’s core voters. In the short-term, increasing prices of imported goods will make local products cheaper in comparison and more attractive as an alternative.
In the long-run though, things might not work out quite the way Trump would hope.
First, there’s the retaliation from hacked-off trade partners, including the EU, Canada and Mexico, who are all threatening counter-tariffs in retaliation.
This means prices for both imported and exported goods will rise, whilst local producers are likely to also increase their prices whilst still undercutting now taxed imported alternatives. Prices rise across the board, which eventually trickle down to the consumer, whilst quality dips too through lack of innovation and reduced efficiency.
Read more: British business beyond the customs union
UK Steel Director Gareth Stace suggested the President’s move has without a doubt started an international trade war.
“It is difficult to see what good can come of these tariffs. US steel consumers are already reporting price increases and supply chain disruption and with some half-billion dollars of steel exported from the UK to the US last year, UK steel producers are going to be hit hard.
“As stated time and time again, the only sustainable solution to the root cause of the issue, global overcapacity in steel production, is multilateral discussions and action through established international channels.”
However, we can’t officially call Trump’s tariffs the start of a trade war without the first retaliation, which came almost instantly through friendly neighbours Canada slapping £9.6bn in tariffs on the US.
Meanwhile, the EU is planning to re-balance the marketplace by introducing their own new import taxes on American products including orange juice, denim, motorbikes and even peanut butter.
And so it begins…