UK Export Finance is supporting more exporters than ever before, and playing its part in the government’s drive to grow the UK’s export economy, writes Lord Price, Minister for Trade and Investment.
I firmly believe that business can be a force for good in society. Successful businesses create employment, pay taxes that fund our public services, and contribute to economic growth. And exporting can help these businesses grow – and grow fast. Statistics show that in the first two years of exporting, a business can grow by up to one third. That means more jobs, more profits, more tax revenue and more benefit to society.
Working together, business and government can ensure that these benefits are felt as widely as possible. That is why earlier this year, after more than 30 years with the John Lewis Partnership, I was delighted to accept the job of the UK’s Minister for Trade, with responsibility for the UK’s trade performance, UK Trade and Investment (UKTI), and UK Export Finance (UKEF).
The UK has a history as a great trading nation, and is the world’s sixth-biggest exporter, with overseas sales making up nearly a third of GDP. We are also a global leader in both goods and services in some of the world’s fastest-growing sectors, with a long tradition of innovation and excellence. We have an open and friendly business environment, and expertise in sectors ranging from manufacturing and construction to services and technology.
UK companies are trusted business partners to buyers around the world – and we have the potential to do far, far more.
That is why the government has put exports front and centre of its strategy. We are now a year into Exporting is GREAT, the ambitious whole-of-government drive to get 100,000 companies to begin exporting by the year 2020. This campaign is about inspiring new businesses to sell overseas by showing them the world of opportunity that is out there – you just have to look at the live export opportunities on the Exporting is GREAT website to see that every day in every country around the world, someone somewhere wants or needs a UK product or service. And our job is to empower them to realise those opportunities, by making sure they can access the support and advice that they need to do so.
Making sure the right finance is in place is a critical piece of the jigsaw for any company looking to sell overseas. That is why UKEF, which aims to ensure that no viable UK export fails for lack of the right finance or insurance from the private sector, is an integral part of this campaign, and of the government’s offering to help UK businesses sell overseas.
UKEF’s results, published this month, shows how business and government can work together to increase growth and UK competitiveness. And the department is continuing to seek improvements in the way it operates and in the support it can provide to business.
Record support for exporters
In 2015-16, UKEF supported more exporters than ever before – whether through its own export finance and insurance or by helping them to find the right source of support from the private sector. There has been a 23% increase on last year in the number of companies supported, 114% more than in 2013-14. And our support benefits not just the businesses selling overseas, but the companies in their supply chains – we estimate that over 7,000 companies indirectly benefited in 2015-16.
This increase has largely been driven by increased take-up of UKEF’s support by small and medium-sized enterprises; more than three quarters of the companies it supports are now SMEs. To put a figure on the impact of UKEF’s support for smaller companies on the UK economy, over £800mn of new UK export contracts benefited from UKEF’s SME-targeted trade finance products. These products have now supported nearly £3bn of UK export contracts since they were introduced in 2011.
Further developing its offering to SMEs is a priority for UKEF, as part of the government’s drive to help new exporters. We recognise that this segment is particularly important because it is how we will meet our target of 100,000 new exporters. The department has come a long way since it re-introduced a range of SME-targeted products in response to the financial crisis, after a 20-year absence from this market. The 2011 British Exporters’ Association (BExA) export credit agency (ECA) survey gave UKEF five out of ten for its product range, against a European ECA average of seven out of ten. In 2015-16, we received nine out of ten, exceeding the European ECA average of eight.
But we are all aware that there is more work to be done. We need to continue to be innovative, flexible and responsive; able to respond to changing economic conditions. That is why UKEF is developing its trade finance products. It is working with its partner banks to expand its working capital facility and the circumstances in which it will be available, for example to support exporters’ supply chains. This enhanced working capital facility will be launched this autumn, and other improvements will follow.
And as Louis Taylor, UKEF’s CEO, wrote in the May/June issue of GTR, UKEF is trialling steps with Santander and Barclays that aim to cut the transaction times for accessing trade finance products by up to half. If successful, this innovation will be rolled out to other finance providers, allowing them to issue eligible contract bonds and working capital loans on behalf of their SME clients and benefit from UKEF’s guarantee in a much quicker and simpler process for all parties.
But simply having the right support on offer is not enough; we need to make sure it is as easy as possible for companies to access it. Over the last year, UKEF, UKTI and other departments have launched the Exporting is GREAT website, a single digital portal to help exporters access guidance and support from both the private and the public sector. The government’s digital-first strategy will help that support reach more companies than ever before.
At the same time, UKEF, UKTI and the Exporting is GREAT team continue to work closely with banks and intermediaries, including through the provision of detailed online product guides to help and encourage bank staff and insurance brokers to use them in support of their clients. And UKEF’s network of export finance advisers provide a vital local interface with companies, bank relationship managers and intermediaries across the country.
Supporting exporters of the future
UKEF was established in 1919, and as the world’s first export credit agency, it has been innovating since day one. And as it approaches its centenary, the department is continuing its unique role providing broad shoulders to help UK exporters of all sizes win, fulfil and get paid for the overseas contracts that will help them grow.
But we recognise that we also have a 21st century challenge: to meet the ever-changing demands of businesses as they seek to compete in a global market place. The growth in the export of services is much more rapid than the growth in the export of goods, and the UK has long maintained a positive balance of trade in the former.
The government can help further our creative industry grow the UK’s reputation as a creative powerhouse. UKEF is looking to ensure that its support is relevant to exporters of services and intellectual property as well as tangible goods. This will require it to keep pace with digital technology, to show innovation in providing the solutions UK companies need and to work in partnership across government and the private sector to develop its proposition to support exporters.
To achieve its goal of lasting growth to the UK’s exports, the UK government needs to be ready to support Britain’s exporters of the future. And with
its innovation and flexibility, UK Export Finance is making sure that it can always fulfil its mission, making exports happen.