Barclays has suggested a series of reforms aimed at strengthening export credit agency support for UK companies, amid a concerning slump in goods exports, particularly among SMEs.
UK goods exports dropped by 12% between 2019 and 2025, driven in part by Brexit, the Covid-19 pandemic and growing trade protectionism, the bank said in a report published today.
It added that the number of UK small and medium-sized businesses exporting goods was 19% lower in 2023 compared to three years earlier. Luxembourg and Switzerland were the only other OECD nations to record a decline over that period, at 3% and 2% respectively.
In response, Barclays suggested that targeted reforms to UK Export Finance (UKEF), the country’s export credit agency – including expanding its risk appetite and further developing its product suite – could help restore trade growth.
“Now is the right moment to explore how government can make targeted, practical adjustments that would help UK companies – especially SMEs – access export opportunities, while continuing to safeguard taxpayers’ interests,” said James Binns, vice-chair of the bank’s global transaction banking business.
Drawing on two bank surveys last year covering more than 1,400 UK businesses, Barclays found that four-fifths of exporters are aware of UKEF. However, only around a quarter have actually used the agency, while a larger share considered applying for support but ultimately chose not to.
Barclays found that one potential barrier to uptake is UKEF’s maximum cover level of 80% for short-term export finance guarantees. This means lenders take on exposure to the remaining 20% of a facility, the bank said, which can affect businesses’ ability to secure support.
Lenders are typically more wary of companies with turnover in the single-digit millions, thinner credit profiles and limited collateral – and particularly those that have not exported before – impeding those firms’ access to UKEF’s products, it said.
Barclays suggested that officials investigate mechanisms for increasing the 80% limit for smaller exporters, for example by offering enhanced guarantees, while remaining within international standards.
For instance, it recommended that UKEF’s general export facility (GEF), which provides working capital support rather than funding tied to specific contracts, could be offered on a portfolio basis to smaller companies.
This could allow full cover for default in some circumstances while keeping the wider portfolio below the 80% threshold, the report suggested.
For businesses that considered UKEF support but chose not to apply, Barclays found the primary reason was the perceived complexity of that process.
It proposed an expanded automated underwriting programme, whereby banks can incorporate UKEF support without requiring direct approval from the agency.
This product is currently available for GEF transactions under £10mn in value and has “significantly accelerated approval times”, the bank said. Progressively increasing banks’ authority to provide automated underwriting would boost efficiency, particularly for larger transactions, it said.
UKEF could also provide greater support to companies that supply goods to exporters but do not directly export goods themselves, Barclays suggested.
These companies make “a significant contribution to wider UK export value chains” but find it difficult to access the agency’s products as they do not generally meet its eligibility criteria. Supplier support should be integrated into existing products and widely promoted, the bank said.
Some of the report’s recommendations target UKEF’s risk appetite.
It noted that the export credit agency’s average ratio of premium income to claims paid is consistently above the benchmark set by the UK government, suggesting its existing risk tolerance could be overly cautious.
HM Treasury could consider reviewing the underlying metrics and risk assumptions used to set that benchmark, the bank said.
UKEF should also be permitted to hedge its currency risk, Barclays argued. The bank said it is “unusual” for an institution handling large overseas transactions risk to be prevented from hedging, and pointed out the agency’s losses on currency fluctuations have topped £100mn in two years.
UKEF steps up support
The report builds on existing initiatives to bolster UKEF’s support for domestic exporters. The agency announced last month it would grant automatic guarantees for working capital facilities provided by a group of UK lenders, part of an £11bn lending package aimed at SMEs.
Its small export builder product, designed to help SMEs build confidence selling to new markets, had its first outing in October last year, helping a Cotswolds-based company secure contracts in Southeast Asia.
The UK government announced in June it would expand UKEF’s capacity from £60bn to £80bn as part of a new trade strategy, and parliamentarians are currently considering a bill that would double this figure to £160bn.
In total, UKEF made commitments totalling more than £55bn in the 2024/25 financial year and has nearly doubled the size of its portfolio in the last six years.
Binns said the recommendations “are about working with government to ensure that the tools available are used to their fullest potential”.
Barclays, which has supported around 400 deals involving UKEF in the last eight years, is “ready to do our part to help drive an export revival across the UK”, he added.
Marcus Dolman, honorary vice-president of the British Exporters Association (BExA), said the bank’s conclusions “largely echo” the findings from its own industry benchmarking work.
“The recent trends of reduced trade growth compared to our peers is deeply concerning,” he said. “BExA welcomes this timely report from Barclays setting out the important role UKEF has to play in reversing this trend.”
Update (February 24, 2025): A spokesperson for UKEF said the agency welcomes Barclays’ report in raising awareness of its products and services.
“In 2024/25, UKEF provided a record £14.5bn in new financing to help British exporters of all sizes break into international markets and grow,” they told GTR. “We continuously listen to our partners and customers so we can provide the best support.”
