Europe: still the first destination for exporters
Exports Marcus Dolman, co-chair of the British Exporters Association (BExA) explains why exporters should continue to target the EU despite uncertainty over Brexit.
Mediaplanet: Should exporters look outside the EU when the UK leaves?
Marcus Dolman: For the next two years and probably after that the EU will still be a relatively simple market to move into. We have lots of common rules and regulations and I don't see all of those being unwound overnight, so from a regulatory, customs and legal perspective the EU is still a good destination for export products. However there are still plenty of unknowns on how this will all pan out in practice and this doesn’t help business plan for the future.
MP: What are the longer term prospects for exports to Europe?
MD: We would hope the UK and the EU will negotiate a mutually beneficial trade agreement. From a business perspective this would be the preference of both UK and EU businesses alike. The only question mark over that is on the politics side, whether the EU will allow that to happen.
MP: In the longer term, how will Brexit change the landscape for exporters?
MD: There is more optimism around than immediately following the referendum result, businesses are now seeing Brexit as a huge opportunity for the UK to rebase its position in global trade. This is a once in a lifetime opportunity for UK Government and they must get it right.
MP: What should the government do to help exporters at this critical time?
MD: The creation of the Department for International Trade with a ministerial position has been a very positive step. This moves trade to the forefront of economic policy in the UK which is good news for UK exporters. A lot of work is also being carried out in government on digital systems to match exporters with opportunities, the Exporting is Great initiative (great.gov.uk) is developing a database of opportunities so both sides can get in there and talk to each other. It has a way to go to be a complete success but it is a positive start and one BExA fully supports.
Government can be doing more to help exporters access new markets, the current OMIS (Overseas Market Introduction Service) model of payment up front for market information is prohibitively expensive for SME exporters. The UK needs to move to a success based model, similar in form to what the French offer their exporters in order to encourage smaller businesses to move into new markets.
Access to finance is another key issue for SME exporters. Typically an SME will have a single bank relationship and often at the branch Business Manager level. The SME is extremely dependent on the knowledge of that particular branch employee to offer suitable products for financing exports. The banks and UK Export Finance (UKEF) need to work together to ensure that the banking community offers the export focused services to all would be exporters.
UKEF has been a very positive tool for the UK exporter, their flexibility and pro-activeness has been recognized by BExA in our annual Export Credit Agency benchmarking papers. However they need to be able to meet the increased demand for their services. We expect some teething problems as UKEF staffs up to meet the demand but we would hope that this disruption is kept to a minimum and doesn’t cause delays affecting the success of UK export opportunities.
MP: What is the biggest barrier faced by would-be exporters?
MD: Fear of the unknown. 85 per cent of our smaller businesses who could export, don't and the government needs to get involved, in the areas mentioned above, to give them the information they need to go out, finance and win those opportunities.