Figures published in March 2019 by the Office for National Statistics (ONS) reveal that across the global economy, the UK was the second fastest growing goods exporter in the world in 2018, ranking second only to China. During that time, UK exports grew by 3.1% to £10.6 billion over the course of the year.
This is good news for UK exporters, and is encouraging given the ongoing Brexit saga and international trade wars that have dominated the press. The results highlight that the UK continues to design, manufacture and export products which are in demand across the world. The popularity of UK products has helped to provide some protection for UK exports, with the weaker pound also benefiting businesses.
For some, these figures will not come as a surprise. Many businesses have continued to develop new products and offer new services, making use of tax breaks such as Research and Development (R&D) tax credits and Patent Box. These tax incentives work effectively as part of the government’s continued focus on its export strategy. It will be interesting to monitor how this develops over the next year or so if the post-Brexit business landscape fundamentally changes.
At Crowe’s recent importers and exporters roundtable discussion, owner-managed businesses (OMBs) from across sectors discussed their concerns for the future, and the barriers they perceive to the long-term growth of their businesses. Although Brexit was, inevitably, at the forefront of minds at the roundtable, in the short term, the group cited difficulty developing new and existing products (44%) and accessing new markets (38%) as the biggest issues facing their businesses in the longer term.
Both of these concerns appear to be recognised by the government, as demonstrated by its continued investment in innovation through tax incentives and the focus on its export policy.
The government is keen to develop this, with International Trade Secretary, Liam Fox commenting,
“my international economic department is focused on growing exports and boosting the UK economy through our export strategy, providing stability as we leave the European Union and putting the UK at the heart of the world’s fastest growing markets through an independent trade policy. These priorities are key to Britain’s economic future.”
The key to UK exporters succeeding in the short to medium term is maintaining flexibility and continuous planning to cope with the unprecedented uncertainty facing businesses. Contracts will need to be carefully drafted to take into account expected tariff changes and currency fluctuations. Businesses will need to have strong plans in place, which they continually develop to take advantage of opportunities and mitigate against risks; gone are the days when a plan can be prepared at the start of the year and left until the following year. Cash flow will remain extremely important for businesses to monitor, especially if trading overseas.
For the government to effectively support exporters, it needs to ensure that it provides good quality, clear and timely advice to businesses, and provides support with changes to duty and tariffs. Above all, it needs to reach some form of conclusion on Brexit so businesses can begin definitive planning and move forward. The delays and press surrounding the process can be damaging for businesses who are unable to plan comprehensively and it may also impact how other countries see the UK as a place to do business.
While the government may be keen to highlight the UK’s success as an exporter, as it indicates that their strategy is working, more still needs to be done to ensure this pattern continues. Exporting in the current climate is extremely challenging, and if the success is to continue, the government needs to increase its support to exporters and other businesses in the UK in this endeavour.
For further information on any of the above, please contact Darren Rigden or your usual contact partner.
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