What kind of UK economic recovery after lockdown? Look to Britain’s small export businesses in their ‘Brexit boom’
In recent weeks, some economic assessments have assumed an economic recovery from the coronavirus lockdown that would take the form of a ‘V-shaped’ bounce-back, while others expect long-lasting permanent damage to the economy. A new Civitas publication finds grounds for optimism in the recent track record of Britain’s smaller businesses and their extraordinary export revival.
But much depends on how the Government uses its powers once the lockdown ends. Marcus Gibson, Head of Gibson Index, looks at how exports have played a crucial role in the UK’s economy and shows why smaller domestic businesses trading internationally must be encouraged to grow.
Marcus Gibson charts how the post-Brexit-referendum UK economy expanded and vital sectors in manufacturing experienced a revival after decades of government neglect and decline. The ‘Brexit Boom’ has been both real and the pace has been accelerating – although now currently subject to immense national and international disruptions in trade and travel, paralysing various sectors following the coronavirus outbreak.
He links the export revival to changes four years ago – before the ‘Leave’ decision in the referendum – when tens of thousands of Britain’s smaller companies (SMEs) began to abandon efforts to find a sale in the EU and moved their marketing firepower to countries beyond Europe. And they have been winning lucrative export deals in many a distant market.
The strongest evidence behind the growing strength of the post-Brexit economy has been the extraordinary rise in the UK’s export volumes – much of it pioneered by the UK’s unequalled collection of SMEs. They frequently design, manufacture and market high quality, niche products. For Gibson, this is the UK’s ‘real economy’, made up of 235,000 SME exporters.
The publication explains why UK exports have been rising in recent years, and given that the UK’s current economic output could now plunge by 35% – according to the Office for Budget Responsibility forecasts – Gibson’s contribution offers some valuable insights into how we can accelerate UK exports.
His book suggests a number of key low-cost programmes the government could implement, including a programme to promote an increase in UK exports by recruiting an ‘Export Elite’ of SMEs that already export to around five markets – and expand them into 50 export markets.
Further recommendations and conclusions include:
- The UK’s commercially focused universities should be funded to deliver professional Export Manager courses. Less than 20% of UK-based SMEs currently export their goods and services. If the UK is to expand its exporting portfolio it must now train a minimum of 30,000 export managers each year.
- The creation of a new Knowledge Commercial Partnership, alongside the highly successful Knowledge Technology Partnership (KTP) scheme, in which a suitably trained graduate is parachuted into an SME to undertake an important project that requires technical skills.
- That government should increase tenfold the current Smart budget of £25m, which currently funds 300 projects each year.
- Return to an earlier recommendation to the government of a scheme in which students who start spinout companies at universities, FE colleges and University Technical Colleges should be allowed to offset against a student loan with the company shares they own if they gain significant value.
- The Department for International Trade should increase the budget of trade show support to enable thousands more SMEs, especially microSMEs, to help them exhibit at a key trade show.
- In terms of the Brexit negotiations, the author further predicts that given the low growth of the EU’s economies, it is doubtful the EU Commission will have the leverage to enforce a trade deal that damages the UK economy. As a result, UK trade with the EU will not decline but continue unchanged at the same level.
- A fresh media focus so the successes of the UK SMEs in the great new export wave since 2016 can be reported and recognised for their achievements.
Britain’s Export Boom