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David Rutley MP: Business needs To rediscover Britain’s trading roots

Rutley DavidDavid Rutley is the Member of Parliament for Macclesfield, Damian Green’s PPS, and a member of the Free Enterprise Group.

The latest GDP figures are encouraging. But with the UK’s improving competitiveness, why aren’t British businesses exporting more?  We have been importing more than we export for nearly 30 years.  More particularly, this is a deficit in goods.  In services, we enjoy a surplus of some £70 billion; in traded goods our deficit is £100 billion.  And where we export to is also imbalanced: just 4 per cent of our exports go to the huge, growing consumer markets of India and China.

The good news is that HSBC forecasts that UK export growth to Asia over the next few decades will be an average 9 per cent a year compared to just 4 per cent to Continental Europe. Half of this growth to Asia is expected to be in industrial machinery and transport equipment, with UK chemicals and pharmaceuticals “managing to remain internationally competitive by innovating new products, improving quality and driving up efficiency.”  This is important as we have become over-reliant on exporting to traditional markets in America and the EU. 

However, in the current world exports league, Germany is 2nd only to China. The UK is 12th – having plummeted from 5th place just a decade ago. This leaves us firmly behind smaller EU members, such as Belgium and the Netherlands. In fact, our exports in goods have grown by an average of just 2.8 per cent over the last decade, slower than both France and Germany. Whatever problems may be associated with EU regulation, it’s not stopping other Member States from exporting. This points to a domestic exports challenge: one that is an urgent priority to address.

So, what are “we” going to do about it?  Firstly, it should be recognised that “we” can’t just mean the Government.  It is time for British business to step up to the plate.  Much is being done to bolster the Britain brand and open trading relationships. But it is becoming clearer that business itself must be more active in exploiting opportunities overseas.

Rediscovering our trading roots is a challenge for businesses of all sizes, but one most marked for small and medium enterprises (SMEs). Last month, the House of Lords Committee on SMEs released an eye-opening report, Roads to Success.  By increasing export values by one third, SMEs would eliminate the UK’s visible trade deficit. Sadly, it appears that British businesses could be showing more interest in exploring export options. “The raw truth that we have to face up to,” hard-working Trade Minister Lord Green says, “is that we do not have enough SMEs that are exporting. ...Quite a lot of companies that are perfectly well positioned to export do not.” 

Among SMEs that produce exportable goods, some of the most important ones to target are those which neither export nor are aware of the potential to do so. More clearly needs to be done to raise awareness of the support on offer.  But equally, business needs to be more curious about the possibilities.  A simple internet search will reveal reams of information on “support available for exporters from Britain”.  A deep-rooted, post-war cultural bias against exporting is often disguised by our great trading past.  And it has been acknowledged by the CBI.  “The only way is exports,” they declare in their latest paper, dedicated to “renewing” the UK’s role as a trading nation.

It would be unrealistic to expect that the United Kingdom will be able to emulate Germany’s performance overnight.  But we can learn from its success.  Germany’s highly active chambers of commerce and trade associations are geared towards exports, supported by a more business-friendly banking system and a highly-skilled workforce with a tradition of work-based training and apprenticeships. Private, customer-focused, family-owned firms – the Mittelstand – are supported by trade guilds and have often found export success by concentrating on being the very best at making a few products or even just one. As a result, one study has found that certain German firms supply up to 90% of the world’s exports of particular engineering components. 

Britain needs to fall in love again with enterprise, entrepreneurs and exporting. The Prime Minister’s personal commitment to leading trade missions to growth markets, such as India and south-east Asia, should be applauded. But business itself needs to take more action. Trade associations and chambers of commerce need to help raise awareness of export opportunities and sources of support. They have another important role in creating stronger business networks and ensuring that British businesses are better, more actively represented in growing markets, such as Brazil and South Africa. Our banks also need to do more by significantly improving their exporting expertise and the way they share that know-how with their clients. 

The Government is establishing the foundations for sustainable private sector-led growth by lowering corporation tax and working to reduce regulatory burdens and flatten barriers to growth in key industrial sectors. At the same time, despite the challenging economic climate, our competitors are demonstrating that clear export opportunities exist. British businesses should seize the day and make exports our business again.


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