The Secretary of State for International Trade Dr Liam Fox has announced the Government’s plan to support UK businesses that export products, and the companies in their supply chains.
This financial support package is specifically aimed at small and medium sized enterprises (SMEs) in the UK and is being hailed as a ‘gamechanger’ by the Government.
Financial support for UK exporters
Dr Fox was speaking at a celebration of 100 years of the UK Export Finance (UKEF) on 5 June 2019 and its financial backing for international trade. This is the first Government support package that will be made available to SMEs exporting to emerging markets from the UK.
The financial package will include:
- The General Export Facility – this covers costs for exporters in general, not limited to costs arising from a specific export deal.
- The Small Deal Initiative – this will go towards the high number of exporting companies taking on small contracts that form the backbone of British trade.
- The extension of financials support to companies in exporter businesses’ supply chains, in addition to the support the exporters themselves receive.
In announcing the package, Dr Fox says: “These… are potential gamechangers for our export industry and will help us to tap a fresh vein of potential from within our economy.”
The importance of UK business in global supply chains
The Small Deals Initiative is the part of the package will involve UKEF guaranteeing loans made to potential overseas buyers of UK goods. The idea is that this will make export bids from the UK more competitive and more popular.
The General Export Facility will mean the UKEF supports the overall needs of exporters, and not just for those needing support for a specific deal. On this Dr Fox says: “Recognising that it takes more than one business to deliver an export contract, UKEF has extended eligibility for its support to companies in exporters’ supply chains.”
The latest information available to the Government shows that more than 23% of UK exports that took place in 2015 were embedded within the supply chains of other nation’s exports. This shows how vital the UK is within the global supply chain. It’s hoped that the more flexible approach from UKEF will give SMEs more access to working capital and bonds.
UK SME exporters increasing year on year
Small businesses are showing growing confidence in their ability and willingness to export. In 2018, 5% of UK SMEs that weren’t exporting reported plans to do so in the future. This was an increase on 3% in 2017.
Around 400,000 businesses in the UK could export but choose not to, and the Government hopes that this financial incentive should help their productivity levels in the export space.
Since 2009, UKEF has provided more than £30 billion of support to UK exporters. More than 600 companies that export from the UK have been able to use this support to grow their businesses overseas. Just over three-quarters of the businesses assisted and supported by UKEF in the year 2017-2018 are SMEs, showing just how vital this sector is to the country’s performance in the global supply chain.
Where does the UKEF fit in?
The UKEF works alongside the Department of International Trade and is the export credit agency for the UK. It began in 1919 to encourage exports following the end of World War 1, and its mission remains to help any viable UK export succeed through financial assistance.
Latest information from the Office of National Statistics shows that the 2018/2019 financial year was the most successful for UK exports since records started. This means the UK is up to 36 consecutive months of growth in exports. Separate information shows that UK exports increased faster than Italy, Germany and France between 2016 and 2018.
James Turner, Managing Director of Turner Little Limited says: “This financial package is described as a ‘gamechanger’ by Dr Fox, and it is certainly very encouraging. Post Brexit the UK will rely more than ever on exports, and businesses need assistance in ensuring this sector continues to grow year on year.”
“The recent figures shown are also encouraging, and the help from the Department of International Trade is likely to strengthen UK exporters even more. The global economy is heading for a slowdown, and there is no doubt at all that the UK is experiencing a difficult time in the run up to Brexit. Building a global UK needs this kind of investment, and this investment strategy is welcome news for UK SMEs. It can be hoped that Britain will become an exporting superpower, with more influence on the world stage in the future. Investment like this will help the country to achieve investment overseas and remain strong into the future.”
About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.