Explains Minister for Trade and Export Promotion Rona Fairhead
There’s no question that, as the UK leaves the European Union, international trade will become an even greater priority for the UK. A vast pool of new opportunities has emerged for UK businesses of all sizes, with large global demand for their world-leading goods and services. Consequently, trade has rightly taken its place at the heart of the government’s industrial strategy.
I am very proud to have been appointed Minister for Trade and Export Promotion, and to be tasked with leading the development and delivery of the government’s Export Strategy.
The benefits of exporting are well known. Companies can use outward sales to grow their customer base, spread business risk, achieve economies of scale, and extend the commercial lifespan of their products and services. Overseas markets also present attractive opportunities for revenue and profit growth, as well as diversification, and opportunities for innovation.
One sector that illustrates the potential of exports is manufacturing, which has proved vital to the UK economy. Britain is the world’s fifth largest economy, and according to the EEF, the manufacturers’ organisation, the manufacturing sector contributes £190bn to our economy. We are also the sixth largest exporter in the world, and the demand for UK goods and services is global.
The government will use the export strategy to support UK companies of all sizes and sectors in developing the capacity and connections to export, enabling them to seize the multitude of opportunities abroad. One of the most powerful tools at our disposal in approaching this task is UK Export Finance (UKEF), the UK’s export credit agency, which has £50bn in capacity to support UK exports projects.
UKEF is designed to ensure that the UK’s goods and expert services have access to finance. With trade finance, exporters can offer credit terms to their customers, secure capital for growth, and protect themselves from the risk of non-payment by overseas buyers. But a new company—and even experienced exporters—might not know how the right finance and insurance can make it more competitive in the international market, and help to grow its sales overseas.
Research from the British Business Bank shows that four out of five UK companies are unsure how to access the specialist loans, insurance and guarantees that enhance international business—and 22 per cent of small and middle-sized businesses reported using credit cards to finance their working capital when exporting.
That is where UKEF can help. UKEF’s purpose is to work alongside the private sector to ensure that no viable UK export fails for lack of finance or insurance. Since 2012, UKEF has provided in excess of £14bn of support for UK companies win, fulfill and get paid to export.
I want UK Export Finance to do even more. In October, UKEF launched a new partnership with the five high street banks: Barclays, HSBC, Lloyds, RBS/NatWest and Santander, allowing smaller businesses to access government-backed trade finance directly from their banks. With these new partnerships, even more companies can access financial support more quickly and easily.
In devising our export strategy, the Department for International Trade will also recognise the enormous contribution of domestic suppliers to the UK’s export performance. Large exporters, particularly in the manufacturing sector, have hundreds, and often thousands, of companies in their supply chains, on which they rely.
The benefit of this to small companies is not just economic but reputational, as supplying to a large exporter is a way for them to gain a global reach for their products.
Companies in the UK supply chain have always benefitted from UKEF’s support for exporters, but now we are going a step further. For the first time, UKEF has made trade finance support available to any company that is supplying directly to an exporter. As a result, thousands more businesses will be able to benefit directly from government-backed finance.
As an economic department operating internationally, our role in the Department for International Trade is to help businesses meet global demand.
The advantages of exporting are shared across the UK economy, through the creation of jobs from supply to distribution, as well as the broadening of revenue streams. With UKEF’s competitive financing, the government is helping to support companies that aim to realise these benefits, and building an improved foundation for supplying UK goods and services to markets around the world.