The UK government’s target of doubling exports to £1tn by 2020 is unrealistic and unlikely to be achieved, a conference in London has heard.
GTR was in the audience as speakers at the UK Manufacturing Conference discussed the government’s target and there was much scepticism around the country’s ability to meet the target, with the general feeling being that it wasn’t realistic and that the government needs to do more to support exporters.
Crispin Simon, the managing director for trade at UKTI, was the sole dissenting voice on a panel of companies, banks and government representatives. “It’s a challenge, not a forecast. We have good companies in the manufacturing and engineering space, we’re world leaders. We just need more of these companies,” he said.
A lack of presence in emerging markets was earmarked as the main reason for sluggish UK exports performance, with 23% of delegates thinking that the limited presence of UK firms in key emerging economies is holding back exports growth, with a further 20% attributing blame to the poor economic performance of the eurozone, which has a drag on demand for UK products. Interestingly, just 7% thought that access to finance was the main problem.
The cold reality, though, is that UK manufacturing exports are still in the doldrums. For UK manufacturers, the proportions of sales which are made up by exports are just half what they are in France, Germany and Italy.
As the UK prepares for chancellor George Osborne’s budget on March 19, the pressure is piling on the government to introduce more support mechanisms for manufacturing exports. A survey conducted by the Engineering Employers’ Federation (EEF – the conference hosts) and YouGov found that 91% of UK citizens agree that “manufacturing is essential for the UK economy to grow”, with 72% wishing the UK made more products.
The Confederation of British Industry (CBI – a lobby group) this week called for the budget to include support for growing SMEs. Among the CBI’s demands is that the government help SMEs gain access to finance through non-bank channels and that it introduces more competition to the banking sector.
“We need to nurture the UK’s vibrant alternative finance market and encourage even more competition in banking so that businesses can get growth capital,” says John Cridland, director general of the CBI.
Sarah Brown, founder of Pai Skincare, an SME in the beauty sector, told the EEF’s conference that any funding that can remove the initial barriers to export (such as customs fees and overseas setup fees) would be extremely helpful.
But there was also a clear message that along with the government, UK exporters need to up their own game too. Too many exporters focus solely on making the initial sale at the expense of long-term relationship building and after-care. It’s a “fair-weather” mentality that needs to change if the UK is to compete with continental rivals, said Peter Anstiss, business development director at BAE Systems. Indeed, the sentiment was reflected in a straw poll of the audience which found that 46% of attendees thought UK manufacturers were not successful at exporting.