International trade is vital for UK growth

The British Chambers of Commerce has called for the new Government to focus on boosting services, advanced manufacturing, green and digital trade if it wants to hit its £1 billion trade target.

The move comes as research shows SME exports continue to languish:

• In Q2 of 2023, half of all SME exporters (50 per cent) saw no change in overseas sales, and almost a quarter (24 per cent) reported a decrease.

• Just over a quarter of exporting SME firms (26 per cent) saw their overseas sales increase in Q2.

• SME Manufacturers fared slightly better as 30 per cent saw an increase, with the services sector at 23 per cent.

• The last time more than 30 per cent of firms saw increased export sales was in Q4 2018. Boosting exports is key to the UK’s future economic prosperity, but firms of all sizes are facing a wide range of stumbling blocks. These include inflationary pressures, a restructuring of global supply chains and a continuing flow of new requirements from the EU trade relationship.

The BCC’s newly revised Trade Manifesto, supported by logistics company WTA Group, sets out a comprehensive list of steps to get more UK businesses, currently just 10 per cent, involved in international trade. It builds on other recent research by the BCC that found:

• 54 per cent of businesses say smoother customs procedures are the key to boosting UK exports.

• 42 per cent favour lowering tariffs, while 35 per cent said there is a need to reduce regulatory barriers, and 29 per cent want better support for smaller businesses

Among the Manifesto’s key proposals are: world of international trade is where British business belongs. If our economy is to grow then we must export more, it’s as simple as that.”

• Establishing an Exports Council to focus on boosting the UK’s services, green, life sciences, and advanced manufacturing exports – achieving the £1 trillion exports target early in 2030s.

• Raising the proportion of UK exports done digitally to 60 per cent by end of the decade.

• Building upon trade documents digitalisation by moving to online border processes at pace.

Shevaun Haviland, Director General of the BCC

• Updating the UK Export Strategy with specific support and promotion for green exporters.

• Earmarking additional dedicated UK Export Finance for green trade.

• Reaching an agreement between the UK and EU in the coming months on electric vehicles and batteries’ rules of origin, to avoid damaging new tariffs.

The new manifesto has been updated to account for the latest developments in the world of international trade and to reflect that several asks from the first edition have been acted upon.

These include:

• Establishing a Government trade growth office (Preference Utilisation Unit).

• Fixing problems with the Northern Ireland Protocol.

• Extending the grace period on CE marked goods.

• Resolving a dispute with the US to avoid punitive tariffs.

Shevaun Haviland, Director General of the BCC, said: “The world of international trade is where British business belongs. If our economy is to grow then we must export more, it’s as simple as that.

“Firms that trade overseas, grow faster, pay better, and are more resilient. If the UK wants to remain one of the world’s largest economies, then we need more firms selling more goods and services internationally.

“Our new Manifesto sets out a long-term strategy on the key areas where the Government must focus if it wants to hit its target of £1 trillion of exports.

“Trade is constantly developing and there are real opportunities for a global Britain to exploit new markets as technology advances, Net Zero takes hold and the geopolitical landscape shifts.

“We are already a world-leader when it comes to digital trade and we must lean more heavily into the opportunities that will provide.

“We also need to build a strategy to protect the UK’s supply chains – the US, the EU and China are all investing £100 billion in sustainable and low-carbon technology.

“We don’t have that kind of money, but we do have great strengths – services, renewable energy, green finance, engineering, professional services, cutting edge manufacturing, food and drink exports, and R&D.

“We need to work with Government to put in place a framework that makes use of all the advantages the UK has, to keep us at the top table.

“Finally, we need to look again at ways of improving trade with the EU. It remains our biggest trading partner, but firms continue to express huge frustration with the complexity and costs involved – which go beyond what they face elsewhere.

“If we all work together to take action then we can revitalise our exports growth and help power up the UK economy.”

Alan Rides Chamber CEO said:

We need to bring a more joined up service for exporters by linking the following organisations in a closer way: DBT, UKEF, British Exporters Association, Institute of Export, Go Global and UK Chambers etc. We need to be truly export focussed and globally linked without adding cost to the empty public purse.

We do not want to see the UK slide from fourth biggest exporter to fifth, but instead we should target to overtake Germany who is in third place. In Germany, they show that their Exports account for one in every two euros earned.

By comparison in the UK, our Exports are £855.4 bn from a total economy of £2.274 trn. So, in the UK it is one in every three, which means we need to grow our exports from £855bn to £1.13bn. This is a challenge but can be achieved through a joined-up plan.

The challenge is clear, to encourage more UK companies to export. Currently 285,100 from 5.6m UK companies are exporting, so we definitely have room for growth, and West London Chambers can help!

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