Related News

Green shoots signal brighter trade picture for 2024: UN

UK post-Brexit trade plan has “run out of road”, report claims

Van Bael & Bellis launches UK international trade practice

Analysis: Trade finance appetite holds firm despite turbulent times

Insolvencies set to surge in 2023 as post-pandemic adjustment continues

The Institute of Directors (IoD) has pressed the UK government to adjust its export growth targets to account for inflation, claiming the current goal of £1tn in exports by 2030 “is not sufficiently stretching”.

Instead, the IoD, a London-based association of company leaders, is calling for a “chained-volume target of £900bn of exports in 2019 prices by 2030” and “15% of all businesses exporting either goods or services by 2030”, equivalent to an additional 90,000 firms.

In a policy paper released earlier this week, the IoD says that because of inflation and other global economic trends, a more appropriate target would be linked to trade volume.

Data from the Office for National Statistics shows the total value of exports in goods and services in 2022 was £815bn in current prices, up from £700bn in 2019. The IoD contends that the target of £1tn in exports at current prices will be “met naturally” by 2030 due to expected inflation.

“In other words, the government has picked a target that can be met as prices alter even if the number of actual items being exported stays the same,” it says.

Emma Rowland, policy advisor at the IoD, says the organisation would like to see “a volume-based target and also a second target to increase the proportion of companies that export”.

This is achieved using the chained-volume measure, which “removes the effect of inflation by capturing the volume rather than the value of goods exported, and then expressing that in 2019 prices”.

Using this method, the IoD suggests that the value of exports in goods and services for 2022 is £691bn, not £815bn.

The £900bn target by 2030 is reached by applying yearly increases of 3.2%, which is the average growth rate of export volumes between 1997 and 2019, resulting in a target of £890bn at 2019 prices.

“Stretching this to £900bn by 2030 would therefore feel like a reasonable target,” it says.

Rowland adds that more focus is needed on individual regions and nations in the UK, with trade data revealing “considerable discrepancies in exporting output across the country”, particularly between London and the South East and the rest of the country. The pressures posed by Brexit and the pandemic have led to around one in 10 businesses ceasing to engage in exports, she says.

A Department of Business and Trade spokesperson tells GTR in a written statement: “We want to see more businesses exporting, which is why we set the ambitious £1tn milestone, and we’re delighted that UK exports hit £849bn in the 12 months to the end of July 2023. 2022 was also a record year for our world-class services exports, hitting over £400bn for the first time.”

They add that the UK government is also “resolving trade barriers, signing new trade deals and providing a network of advice” via its export support service and funding through UK Export Finance.

The UK’s post-Brexit approach to trade has been closely scrutinised, with some claiming the country lacks an ambitious strategy.

The number of exporting businesses declined in the year after the UK left the EU, according to data from Coriolis Technologies and the Institute of Export and International Trade.