INDUSTRYNEWS
SURVEY WARNS OF THREAT TO UK
EXPORTS IF BRITAIN LEAVES EU
Businesses have highlighted concerns about the threat to UK
exports if the UK breaks away from the European Union.
These are among the findings
of this year’s International
Trade Survey, commissioned by
The Institute of Export (IOE),
conducted by Trade and Export
Finance (TAEFL) and sponsored
by AIG.
The survey highlighted that
although 72% of UK companies
are more confident about business
prospects in 2014 than in 2013
(up from 59% 12 months ago),
almost 50% regard continued
EU membership as critical to
their business, up from 45% last
year. This figure rises to 58%
for businesses with a turnover of
more than £10 million.
Launched in Westminster, this
is the fifth year that the IOE has
commissioned the survey – the
largest independent survey of its
kind which captures the views of
2,800 companies.
IOE Director General Lesley
Batchelor says: “The UK
government has set a target to
raise the level of exports to £1
trillion by 2020. Encouragingly,
the survey findings show that
69% of UK businesses expect
to increase their dependency on
exports over the next five years
but there is a real concern that
UK exports are not rising fast
enough to meet the government’s
target.
“UK exports reached £304
billion last year – up from £300
billion in 2012 – and as the
economic recovery takes hold
export levels should accelerate.
However, the EU remains the
UK’s largest overseas market,
accounting for around 60% of
national exports. The negative
impact of the UK leaving the
EU would be significant on UK
companies and the balance of
trade.”
The report has identified three
key areas that companies believe
would help them to grow their
business and boost exports – less
red tape, increased government
support and help getting paid.
Adds Lesley: “While companies
are clear on the importance of
staying in the EU, a significant
number would like to see some
renegotiation on terms. 41% said
that less red tape would be the
single change to the UK’s terms of
EU membership that would most
benefit their business.
“Companies also need help in
compliance with local regulations
in overseas markets, but an
information gap exists regarding
government support for exporters
– only 2% see this currently
as driving export growth. The
IOE’s training and education
programmes work hard to ensure
that businesses understand the
range of initiatives in place to
support them in searching for
new markets for example through
UK Trade & Investment and UK
Export Finance, but more should
be done.
“Our education programmes are
just part of the work needed to
make businesses aware of the risks
involved and how to mitigate
these using all the financial
products available. Concerns
around non-payment, which was
cited as the most significant risk
by 42% of businesses is often
related to scant understanding of
how world trade works. While
49% of companies rely on open
account payment, only 37%
purchase trade credit insurance,
something that can help allay
fears about not getting paid; a
recent report by Intrum Justitia
revealed €360bn has been written
off in late and unpaid debts across
Europe.”
Will Clark, Head of Trade
Credit at AIG in the UK,
comments: “Business confidence
in the UK is rising. However,
awareness of the increasing range
of risks – political, economic
and regulatory to name just a
few – posed by entering into new
markets, and how best to protect
against them, appears to be going
in the opposite direction.
“The fact that non-payment
tops exporters’ list of concerns yet
the number of companies buying
trade credit insurance is in decline
means that the insurance industry
needs to respond by developing
more innovative products which
better address buyers’ needs and
concerns. Significant progress has
already been made, for example
in introducing policies with
non-cancellable limits which
provide greater certainty to
buyers. However, more needs to
be done, both in terms of product
development and in making
buyers aware of the benefits of
trade credit insurance, not only to
protect them against insolvency
but to help secure financing that
allows them to invest and deliver
future growth.”
To see a full copy of the report,
visit http://www.export.org.
uk/images/pdf/International_
Trade_Survey_2014_Report.pdf
To read more, visit www.clearview-uk.com
AUG 2014
31