UK will miss export targets without a change in government approach

Government needs to rapidly increase its support to those looking to trade overseas, both on a financial and practical level, according to a new report by ICAEW.

Research conducted by ICAEW amongst over 600 UK members in business has found that the proportion of businesses that export has remained consistently around 50% over the past four years. If government is to hit its export target of £1tn by 2020 then the number of exporters will need to increase by 10% per annum over the next six years.

Worryingly for the government, only 2% of non-exporters plan to start exporting in the next 12 months. The majority (76%) of non-exporters say the reason they do not export is because their business is UK focused. These tended to be micro and small businesses and those in the construction or services sectors.

Key findings show:

· The EU (65%) and USA (39%) remain the most important export markets for UK businesses, though Asia Pacific (34%) and the Middle East (21%) are significant markets.

· Of those looking to export expansion in the next 12 months (37%) favour the EU market, though there is an increasing focus on Asia Pacific (34%) and the Middle East (18%).

· Accountants (25%) are the second biggest source of business advice for businesses looking to expand into overseas markets, after government departments (40%)

As part of the research, a series of roundtables took place around the UK with ICAEW Chartered Accountants working with or within businesses of varying sizes. They found:

· There was a lack of in-market support for businesses once they start trying to break into new markets, and UKTI and UKEF aren’t visible enough

· In addition, embassies abroad lack business expertise to help those who break into new markets

· Tax is impractical for exporters – checking EU VAT numbers is often cumbersome and impractical with some reporting very long delays

· Culture is a big issue – most businesses fail to understand the issues when dealing with foreign countries

Commenting, Stephen Ibbotson, ICAEW director of business, said:

“The government was commended for its ambitious goal of increasing exports to £1tn by 2020. If this aspiration is to be realised then we must increase the level and awareness of support for exporters, on both a financial and practical level. Businesses themselves also need to understand the basic issues when making goods to export, or setting up in another country.

“Exporters are dynamic businesses who are looking for the next opportunity, but the piecemeal funding on offer is hampering their efforts. The government must look to boost in-market knowledge at embassies, so that experts on the ground can help firms navigate their export journey.

“One way to solve this would be to have a segmented export strategy, with different support depending on the size and market of the business. If the government continues to provide exporters with inadequate backing, this will impact on the speed and pace of the economic recovery. At the moment the message is just not getting through.”