Today's figures of UK trade highlight the critical need to start taking urgent action to boost our export performance.
The UK is home to a range of outstanding businesses, but as a nation our products and services do not achieve their full potential in global markets. Our trade deficit continues to grow. The number of UK businesses that export (goods and services) has been declining for more than 10 years. UK exports stood at 27% of GDP in the UK in 2015, compared to 30% in France and 47% in Germany. Economic analysis by CEBR for Grant Thornton has shown that if the UK could match the export performance of Germany, it would increase UK GDP by £84bn by 2025.
In goods and services, exports account for less than 10% of turnover for more than half of UK exporters; and fewer than a quarter export more than half of their turnover. There is huge potential for existing exporters to export more and for the 27% of SMEs who export only to the EU to expand to other markets. In the coming years, as the UK builds new relationships with the EU and the rest of the world, our SMEs and mid-market businesses will face ever greater competition from their counterparts in Asia, the Americas, Africa and Europe.
As UK businesses seek out new global markets, they will face more complex supply chains and global distribution networks. We need to reverse historic under performance and rise to future competitive challenges. We need to act now. We can't wait until a Brexit deal is negotiated. And we all have a part to play - British businesses have to start doing more to help each other.
At Grant Thornton, we have been bringing together leaders from different sectors across the UK to discuss how we can shape a vibrant economy – one that is collaborative, open, trusted, connected and prosperous. International trade is central to this vision. These discussions have identified a number of actions we can take in the UK to boost exports:
•Introduce a new tax credit for the cost of researching and entering new markets.
•Support collaboration networks that match smaller firms with larger exporters.
•Leverage the UK’s private sector expertise (e.g. in banks and professional services firms) to encourage, enable and support their clients to export to new markets.
•Ensure that reforms to the UK immigration system support international trade and enable business to benefit from cultural and operational links with key markets.
In my next blogs I'll be sharing some more detail on these ideas.
UK exports fell in June despite hopes of a boost from sterling's weakness