Trade Promotion: 5 ways to boost UK exports
April 06, 2017
Matthew Alabaster blogs on what UK can do now to promote its exports. Visit Trade Matters for more information.
Article 50 has been triggered and the two-year countdown is on. Much of the attention will now be focused on the exit negotiations, the shape of our future trading relationship with the EU, and our ability to strike attractive trade deals with newer markets.
But trade policy is only one part of the recipe for improving our trading performance with the rest of the world. What’s more, it will take several years before we see the impact. So it is important not to forget that there are plenty of more practical, constructive things that the public and private sectors can do together to boost our exports that could have a more immediate impact.
The Industrial Strategy green paper seeks engagement on a range of topics including trade support. In that spirit, set out below is a ‘5 point plan’ for boosting UK export performance. These are my personal views, and I’m always open to hearing your views too, but the principle is that there is plenty we can be getting on with, rather than wait passively for the outcome of long and complex negotiations.
1. Make the market in the UK
For companies to export, they need to be successful in their home market. So an export strategy should start with an agenda to make UK suppliers as strong as possible at home, to give them a stronger platform for export. For example, government could be more strategic with its expenditure and procurement to ensure more IP is generated and value is captured by UK suppliers. Areas where we lack capability or capacity should be identified and addressed through supplier development or targeted FDI programmes. Government could be the ‘first buyer’ for new technologies to de-risk development and give them scale. Major government programmes could also have a double bottom line: value for money and economic legacy. We have played rigidly to the rules of EU procurement – it is now time to push that thinking.
2. Focus on our strengths
We should not focus an export strategy solely around small businesses, or on sectors where we don’t currently have a strong export platform. It would be great if more small businesses exported, but moving the needle on our balance of payments will require our medium and large businesses that have a track record of exporting to become even more successful. Success at this level will directly benefit the SMEs in their supply chains. As for sectors – in the modern economy, no country the size of the UK can expect to be brilliant at everything. We need to pick a portfolio of sectors in which we have (or can generate) comparative advantage. For example we have leading players in the planning, design and operations of modern transport infrastructure. We should support the champions in these sectors to be more successful overseas and to bring more of the supply base with them.
3. Identify and support high potential sectors
These are exciting times for technology and disruption. Arguably there is a greater rate of technological development now than at any time in history. We need to identify technologies with export potential, sponsoring them while they achieve critical mass and facilitating their penetration of export markets. We have some incredibly innovative companies that have huge potential, but that don’t have the resources or the channels to market to drive export sales. Let’s make sure we grab the chance to have a world leading artificial intelligence industry, or an autonomous vehicle industry. What are the industries of tomorrow, who are our future champions, and what can be done to make sure the UK is in the lead.
4. Use government influence overseas
The UK has one of the world’s best diplomatic services, supported overseas by an excellent network of trade advisers and other organisations. What could be better is the strategic ‘top cover’ – an aligned programme of ministerial and diplomatic engagement focused ruthlessly on priority sectors, countries and companies. In most parts of the world outside the EU, government support is incredibly useful, but it could be more strategic. What can government do to initiate opportunities in target markets? What is in the ministerial ‘toolkit’ – for example funding initial studies for major new overseas projects? Proposing collaboration agreements between local and UK industries to address specific issues? Recommending companies or consortia for particular opportunities?
5. Harness the power of government
The government has called on the private sector to up its game. I agree the private sector needs to respond, but the challenge goes both ways and government could help businesses by being clear on how far it can now go in supporting UK industry. The Prime Minister’s vision of a ‘new, active role’ for government is a welcome change of tone. Government needs to consider how to move beyond just creating the right conditions for success, to a position where it can actively support our key sectors succeed overseas. With strong government support, UK companies will be able to compete better against those companies from countries whose governments actively champion their own industrial winners.
With its focus on industrial strategy, the government has set an ambitious tone that is very welcome. While our negotiators work on achieving the best deals in Brussels and further afield, the rest of us should get on with the business of export.