As we head into the final days of 2014, it’s good to look back over the past year and reflect on how the landscape for international business has changed for UK-based companies.
We’ve recognised two recurring themes in the press throughout 2014:
Let’s start with the good news first, 2014 has been a stellar year for government action and policy regarding companies looking to export.
When we gave a review of the budget back in March, and now with the chancellor’s autumn statement – it’s clear that exporting is not only high on the agenda, but the government is actively helping companies grow internationally.
Looking back to the March budget our summary falls into 3 strategies.
Direct Lending and Finance
The government is now looking to invest in businesses directly to help boost overseas trade. Their measures include:
- doubling the size of the Direct Lending Scheme to £3 billion
- making the Direct Lending Scheme permanent (it was launched as a trial in 2013)
- relaxing conditions on loan sizes, and lending at the minimum interest rates allowed by international agreements
- working in partnership with the private sector providers to deliver the enhanced lending scheme
The government have launched a consultation on proposed changes to legislation, which would give support to businesses in the UK that are engaged in exporting or exporting supply chains. Previously, the government only offered support directly connected to identifiable export contracts.
This is a more proactive and speculative move from the coalition.
The government has pledged to continue to raise the awareness of export finance in general.
They are also dedicated to increasing the number of export finance advisers based around the country, and putting additional resources behind the marketing and communications activities. As the government is the largest advertising spender in the UK, it has the means and the contacts to generate huge awareness.
9 Months On – What are they actually doing?
The chancellor’s autumn statement provided 3 more defined tactics in helping the growth of exports:
1 – The UK infrastructure will be upgraded and innovation will be fuelled
A well-developed infrastructure is a key requirement for successful international trade. The government has committed £156 million to expanding our own infrastructure in the UK. £15 billion will be spent on roads and £7 billion is allocated to improve the North’s infrastructure and fuel innovation throughout the region, especially in the sciences – where export growth is promising.
2 – £20 million will go to help first-time exporters
There is a government target to help 6,000 companies become exporters each year. In addition, 5,000 companies each year will receive support to access new markets through the internet.
3 – UK Export Finance (UKEF) will be modernised to help SME’s Export
UKEF is digitising its processes to make these more accessible for SMEs. In early 2015, UKEF will present clear proposals on how to help exporters with their working capital and global supply chains.
So what about the bad news?
On the opposite side of the coin, there seems to be a lot of contradiction in business press and in many conferences about the actual state of the economy in the UK and abroad. And cynics say the changes made by government are reactive to a weakening economy.
In September, Britain’s main manufacturing trade association trimmed its growth forecast for 2014 after its members reported the first fall in export orders since early 2013.
But the contradiction continues, as this would still be the sector’s fastest expansion since 2010, when output rebounded by 4.2 percent after slumping more than 10 percent in 2009.
The biggest difficulty the UK faces is that the euro zone economy stagnating and it represents such a huge amount of the UK’s exports. Our currency is strong and there are political risks on the rise, the picture of demand was now more uncertain than for some time.
In summary, despite all of the contradictory reports, there is still an overwhelming sense of positivity amongst our clients and partners about international business growth as we move into 2015. We’ve seen some big moves from the government to support entry into the export market, especially for SME’s.
2014 has been a year of unsettled performance and tentative steps toward growth. However, it’s clear that being bold and entering new markets whilst minimising risk with the governments financial help could make 2015 the year to start your export adventure!