David Prosser: Exporters need all the help they can get
Thursday 10 February 2011
Outlook They seek it here, they seek it there, but the support for Britain's faltering economic recovery remains elusive. Yesterday's trade figures were somewhat skewed by December's cold weather, but there is no escaping the conclusion that the export sector is not yet up to the job of carrying the rest of the economy on its shoulders.
Exporters are certainly faced with an encouraging environment. Sterling, despite speculation that increases in interest rates are on the way, remains relatively depressed, so our goods and services are affordable. Demand has normalised in key markets such as the European Union, and further afield it remains buoyant with huge opportunities in emerging economies like India and China.
The problem is that Britain just does not have much of an export sector. In part, that may be the mindset of those companies that should be selling abroad. A British Chambers of Commerce survey of thousands of small and medium-sized enterprises, published yesterday, reveals that two-thirds have not even begun to address the export market. In many cases, their products and services would be suitable for overseas buyers, but there is no exporting culture to encourage that expansion.
The Government's White Paper on trade and investment is thus to be welcomed. Coming on top of the high-profile trade missions that the Department of Business has lead over the past few months, it suggests that ministers are serious about trying to rebalance Britain's economy.
The difficulties for many would-be exporters, however, fall into a single category, and it is a familiar one: lack of finance. The BCC reports that trade finance and insurance, so crucial for SMEs keen to sell their wares abroad, remains expensive or simplyunattainable. The cost of currency fluctuations is also an issue. And, while the Government offered additional support yesterday, the private sector still seems reluctant to help.
Back to the banks, in other words. There is only so much the public sector can do to assist Britain's export trade, at least in the short term (over a longerperiod, the bigger issues are around training, skills and culture). What it needs most is a banking sector prepared to take a risk on trade. And that may be a big ask.
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