THE UK has been running a trade deficit consistently since 1998.
As a trading nation, we’re being outperformed by our European neighbours who have successfully engaged their SME sectors in delivering export growth.
According to the World Bank, Germany has outperformed the UK in export growth in 15 out of the last 20 years.
While SMEs are understood to account for almost 20% of exports from Germany, in the UK we have no clear understanding of their contribution as according to a recent Select Committee on Small and Medium Sized Enterprises “the data is inconsistent, based on guess-timates and confused by definitional problems”.
The 2015 Summer Budget acknowledged that the UK must focus outwardly, and called for:
- an accelerated integration of the single market in the EU
- finalising free trade agreements with countries like the US (Scotland’s major trade partner after the EU)
- increased trading links with emerging economies in Asia and Latin America
The BCC’s International Trade Survey 2015 supports this strategy, as it showed that the biggest barrier to entering new markets for 37% of exporters in the North-east of Scotland is regulation.
We would argue that the Treasury also took a step forward by announcing a reduction in corporation tax, since 28% of North-east exporters said this would encourage them to increase their exports.
However, the full implementation of the Cole Commission’s recommendations will be necessary if the UK is to meet its target of driving exports to £1trillion by 2020.
We particularly welcome the commission’s suggestion to use a joined-up approach to export support and deliver more help to SMEs.
Our Chamber works in partnership with many organisations and our trade missions over the last couple of years have helped exporters connect in Brazil, Nigeria, Mozambique, Tanzania, Kenya, and Uganda.
Our mission to Mexico in September focuses on the oil & gas sector.
It concerns us that, while there are many support schemes for companies, many small companies with a high potential for growth are left unidentified.
The Scottish Parliament Economy, Energy & Tourism Committee’s report in March 2015, “Internationalising Scottish Business”, showed that in 2013 only 16% of all international exports in Scotland were by small companies.
In addition to access to advice and funding, the Wilson Commission’s report on Scottish exports highlighted the need to tackle gaps in skills such as international sales and marketing and foreign languages.
In January 2015, we said that the UK’s targets seemed out of reach, both because of national gaps and international factors like falling imports in China and Russia and the low oil price.
These continuing factors, compounded with a weak Euro and shaken confidence in the EU, support the view that new opportunities must be explored further afield.
SMEs can be the key to our nation’s trading aspirations, and business organisations like the Chamber network here and overseas can support that growth.
We believe that a joined up approach with the public sector is needed to fill the existing gaps and help businesses of different sizes fulfil their ambitions of internationalisation.