7 February 2022

How Britain can unleash £1 trillion worth of exports

By Mike Freer MP

Napoleon Bonaparte once called Britain a ‘nation of shopkeepers’. He meant this as an insult, but we wear it as a badge of honour – every generation of Britons have been great entrepreneurs.

Now as an independent trading nation, we must build on this legacy – and grow, modernise, and enhance our economy to deliver jobs, improve productivity, and ensure opportunity is spread across every corner of the country.

In public, the discourse is about how to do all this, and the big macro-economic levers – taxes, government spending, and interest rates – tend to dominate. 

But a real economic superpower often goes under the radar – exporting.

Exporters are on average a fifth more productive, pay higher wages than domestically focused businesses and supported 6.5 million jobs across the country in 2016.

They are more likely to innovate, and selling to markets overseas allows them to diversify their risk profiles and be more resilient. 

But only one in ten British businesses export. With many SMEs who have the capability to export choosing instead to focus on the domestic market.

Research from the Coalition Government showed that just 14% of UK exporters are what economists call ‘superstars’ (exporters that sell more than 10 products to more than 10 markets). In Germany, that figure stood at almost 40%.

This is important, as further research shows how superstars pull smaller firms into their supply chains, enabling indirect exporting and benefitting local and national economies.

All this underlines why boosting our exports is such an important part our Government’s work to level up the country and grow the economy.

Research from the Department for International Trade shows that Government support can help our businesses overcome barriers to exporting, including high costs and a lack of expert knowledge.

Analysis from King’s College London found that previous UK Government export promotion improved firms’ performance overseas. It also improved their overall business success. 

And what’s more, they found indications that support delivers more general economic benefits, including vital increases in aggregate productivity. 

So we are using our refreshed Export Strategy: Made in the UK, Sold to the World to usher in a support revolution across the country. Our aim is to reach a £1 trillion worth of exports and reap the economic rewards this would bring.

This is an ambitious goal. But by working alongside businesses to fully leverage our strengths in rapidly growing sectors like clean growth, tech, and life sciences, we can get there.  

We have expanded the Export Support Service, a one-stop shop for exporting advice and single point of contact for businesses – currently focused on Europe, but with more markets to follow.

Our Export Academy is growing to offer SMEs in every part of the UK the chance to learn how to navigate the technicalities of exporting.

Our hundreds of DIT staff overseas are tasked with helping exporters in markets, while our new Trade and Investment Teams in Scotland, Wales, Northern Ireland, and the Northeast will ensure our support is available to companies no matter their geographical location. 

All this work is underpinned by UK Export Finance (UKEF) and the £50 billion of finance capability they are making available to ensure no viable UK export fails due to a lack of finance or insurance – work they do at no net cost to the taxpayer.

King’s College’s research also emphasised that superstar exporters are more likely to be foreign owned and, therefore, that being open to overseas capital appears key to building exporting powerhouses.

In this regard, we are already in a strong position. Last year, the UK ranked as Europe’s most attractive investment destination. 

But we need to do more to attract companies who have the potential to be major exporters. This is why the Export Strategy expanded UKEF’s mandate to secure foreign direct investment in the industries of the future – industries that have the potential to deliver huge export wins. 

In addition, UKEF’s Export Development Guarantee, which supports large exporters’ overall capital requirements, has been adapted to cover companies whose investments have the potential to create significant exports, even if they are not currently operating in the UK.

Finally, if we are to win the race to £1 trillion, we must use our programme of Free Trade Agreements to remove the barriers that stand in the way of our exporters and strengthen our ties with the world’s fastest growing economies.

Take the deal we recently signed with Australia; it eliminates tariffs on all UK exports and is expected to unlock more than £10 billion of additional trade. As well as paving the way for our accession to CPTPP – a free trade area made up of some of the Pacific’s most dynamic economies, with a combined GDP of more than £8 trillion.

So, while we may have once been deemed a nation of shopkeepers, if we are to fully achieve our potential as a Global Britain, we must become a nation of exporters. 

This will allow our businesses to thrive, innovate and grow the industries which will define our future and cement Britain’s place at the heart of a network of outward looking, free trading nations.

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Mike Freer is MP for Finchley and Golders Green, Minister for Exports and Minister for Equalities.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.