Civitas
+44 (0)20 7799 6677

Proactive Export Policies Needed to Target Critical Emerging Markets

Proactive export policies needed to target critical emerging markets

A new Civitas report argues that Britain is losing market share in key emerging markets because existing policies to support exporters lag behind German and American policy measures.

Underperforming British exporters

Sterling has declined by 20% since 2008 yet British exports have barely increased by 2%. Meanwhile the US and Germany have both performed better without experiencing an equivalent devaluation. Incoming Bank of England governor Mark Carney has said that ‘British exports are concentrated in slow-growing advanced economies, particularly in Europe, rather than fast-growing emerging markets’. In 2011, 6.1% of German exports went to China, compared with 2.9% for Britain. Report author Kaveh Pourvand argues that the government must do more to help exporters if they are to target critical emerging markets.

UK should learn from Germany and America’s proactive export policies

The German and American governments have been far more active in boosting exports than the UK, which follows a more laissez faire approach. Germany’s export credit agency (ECA), Hermes, provided €32.5bn worth of financial support to German exporters in 2010, equivalent to 3% of Germany’s total exports. The UK equivalent, the Export Credits Guarantee Department (ECGD), only provided £2.9bn worth of financial support, or 1% of Britain’s total exports. Very little of the ECGD’s financial support goes to SME exporters, the future sources of growth. In the US however, ‘the Export-Import Bank… is on track to meet its target of doubling its annual lending to small businesses to $9 billion by 2011’. [p.2]

Coalition gives with one hand, takes away with the other

Government policy is also confused. The government wisely plans to combine the resources of the Foreign and Commonwealth Office (FCO) and UK Trade and Industry (UKTI) to provide UK businesses with support and local intelligence on high value international contracts. Yet at the same time it is cutting the budget of the FCO by £240m.

Mr Pourvand writes: “Most of the FCO’s budget relates to buildings and staff. It is perplexing that the government is seeking to build a network of support staff while simultaneously cutting their funding.” [p.3]

Nor has the coalition government used its inter-governmental contacts to the benefit of British business as well as it could have. Citing the CBI, the report states: “Angela Merkel has made six visits to China during her Chancellorship. During one visit in 2010, $5bn worth of new deals was secured. Similarly, then French president Sarkozy secured €15bn worth of new trade deals in a visit to China during November 2010. During the same month, Cameron only managed to secure £1.4bn worth of new trade deals.” [p.3]

Recommendations

  • Increase financial export support provided by the ECGD to at least 3% of total British exports.
  • Reverse cuts at UKTI and the FCO so that UK firms have high-quality market intelligence from abroad and obtain good advice at home.
  • Take the initiative to involve business substantively in well planned trade delegations and focus on key markets that match the UK’s strengths.

For Media Enquiries:

For all media enquiries please contact:
Kaveh Pourvand, Report Author and Research Fellow at Civitas, on 020 7799 6677
Daniel Bentley, Communications Manager: 020 7799 6677.

Notes For Editors:

i. The report is available here.

ii. Civitas: The Institute For The Study Of Civil Society, is an independent Westminster think tank. Its research programme receives no state funding and it has no links to political parties.


Download Associated PDF

Newsletter

Keep up-to-date with all of our latest publications



Sign Up