Jim Armitage: Boosting our exports comes at a price
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Thursday 17 October 2013
Outlook The Cameron-Osborne Chinese trade circus has won hugely admiring headlines for our leaders this week.
Just how much business has actually been done is a moot point, though. Bankers were sniggering behind their hands at the glorious headlines yesterday trumpeting the tiny Chinese currency trade deal. I'd argue that it can never do any harm to have the Prime Minister meeting the top brass of major economies to talk trade, particularly when, as with China, perceptions about these potential partners back home among the British public are far too negative. But it's a bit like advertising – you can't quantify exactly what kind of return you're going to get for your investment.
The boss of the British Chambers of Commerce, John Longworth, puts it less diplomatically: "You don't build an export economy through political delegations and cocktail parties."
Instead, you have to invest patiently in deep, long-term relationships between British business people and customers in the markets you're targeting. That is precisely how Germany has cracked so many big export destinations – by having a presence through its global network of business chambers.
So the Government's decision to fund a doubling of the BCC's chambers to 20 more territories is a good one. Rather than having Foreign Office mandarins attempting to advise our entrepreneurs, all the SME-type export advice will now be handed over to the businessmen and women of the BCC network.
All very well except for one thing. Money. Somehow, these chambers are expected to drive through a plan to have £1trn of UK exports a year by 2020 (growing our overseas sales by 9 per cent every year) on a grant from the Government of £20m. Not just that, but the £20m is spread over two years. Across the whole BCC overseas network, that's less than £250,000 a year for each country.
By contrast, the German government, whose overseas chambers are already up and running, invests €57m a year in such efforts. On top of that, where British firms struggle to obtain funding to fulfil their orders from overseas, Germany offers, through its state-backed Business Bank, more than €60bn a year of financing to SMEs.
As Mr Longworth will tell the BCC's International Trade Conference today, the task it has been set by the Government is "heroic". A euphemism if ever there was one. If we are really serious about boosting exports, we have to invest properly in our exporting infrastructure like Germany does. Political photo opportunities in exotic locations are one thing. A coherent export policy is an altogether more serious and costly investment.
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