Export plans can drive recovery

New measures aimed at boosting exports by smaller companies to help drive an "open trading system and a competitive British economy” can drive the growth of international trade in the North West, according to UK Trade & Investment’s regional director Clive Drinkwater.

Speaking to Insider, he said the plans demonstrate that the government is serious about helping more small to medium-sized enterprises take advantage of export markets.

Business secretary Vince Cable yesterday (9th February 2011) announced the range of new finance and insurance products as part of a Trade and Investment White Paper aimed at helping companies to export more goods overseas.

In a statement to MPs, he said the UK had “consumed too much and exported too little” in the last few decades – and with Germany now exporting over three times as much as Britain it was "vital to turn this around".

Four new schemes will be created to help businesses get access to credit and insure themselves against risk, and one existing scheme will be extended.

An Export Enterprise Finance Guarantee Scheme (EFG) will be set up by the Department for Business, Innovation and Skills (BIS), offering export finance valued at up to £1m to small businesses.

The government's export credit agency, the Export Credits Guarantee Department (ECGD), will launch an Export Working Capital Scheme, a Bond Support Scheme, and will support banks offering foreign exchange hedging contracts to small businesses by sharing credit risk.

Drinkwater said: “It’s help for small businesses, but there are also measures to help larger businesses. The EFG scheme starts off at £25,000 but goes up to £1m – that seems to me to address a real market need.

“We’re really hoping this will encourage more businesses to look at exporting. The argument about why companies should export has been won a long time ago, but we need more companies to listen to that and take a look at the opportunities available.”

Cheshire-based Forum of Private Business chief executive Phil Orford added the EFG plans are particularly welcome and should be “hugely helpful” to businesses that have been prevented from accessing the funding required to exploit foreign markets.

“And while we shouldn’t downplay the value of the European export market – our close proximity to Europe and shared legislation mean it’s a vital export market for many SMEs – the white paper’s stated aim of opening up fast-growing economies such as India and China to British SMEs should be applauded,” he said.

“I would also welcome the government’s acknowledgement of the role it needs to play in taking the lead on international trade and devising an overall strategy on behalf of smaller exporters.

“That’s something we have specifically called in recent months for - the government needs to effectively act as a ‘sales director’ for the UK, providing leadership and the sales tools required, if its SMEs are to embark on a successful global expansion drive.”

The government’s plans follow new figures from the Office for National Statistics that the trade deficit in goods and services has widened to its highest level since August 2005.

The UK deficit was £4.8bn in December - compared with £3.9bn in November. The surplus on trade in services was estimated at £4.4bn in December, compared with a surplus of £4.5bn in November. The deficit on trade in goods increased to £9.2bn in December, compared with a deficit of £8.5bn in November. Exports rose by £300m and imports rose by £1.1bn.

(Information from Business Insider)