Posted by

Mike Spicer, Senior Policy Adviser

12 Jun 2012

The need for the private sector to become more export-oriented in the face of difficult conditions at home is widely accepted as necessary to the UK’s economic recovery. But talking to businesses across the country, we at the BCC continue to hear from Chamber members about the continued difficulties they face in accessing finance to expand and create jobs.  So how are these two issues linked? Is the availability of finance holding back restructuring and undermining the country’s export drive? And how does the domestic context business face, including pressures on cash flow, influence their decision to expand via exports? Our publication released today Exporting is Good for Britain But Exporters Need Access To Finance To Manage Costs (available for download below) addresses these questions.

Our survey results show that domestic market conditions and the financial position of companies do matter to export decisions – whether to export for the first time or to grow volumes. Declining sales, profits or market shares encourage businesses to search for new markets overseas. But seeking out and growing these markets involves upfront costs and managing additional risks: over a third of potential exporters say that resource levels and access to finance are ‘highly influential’ in deciding if, when, and where to export. Businesses that are actively considering exporting or recently engaged in international trade say they are less likely to start exporting if their cash flow position is deteriorating. Yet current exporters say they are more likely to seek growth in overseas markets if their domestic cash flow weakens. This suggests that where companies have the experience, the organisation and the contacts, offsetting weakness in one market by growing another is a strategy of choice.  But for the vast majority of potential exporters, our survey shows that cash flow considerations are a barrier to overseas trade, and to rebalancing the economy towards exports.

To support the re-balancing of the UK economy towards exports, the government must do more to improve access to finance, particularly for SMEs that are potential exporters. But it is not enough that initiatives exist – there must be clear routes to market and an awareness among potential beneficiaries and their intermediaries that they can access them. The BCC is calling on the Government to create a business bank: it would be a highly visible route to market for state-backed finance initiatives and promote access to growth finance for exporters that have been refused elsewhere. There is also a need to better target trade promotion assistance at SMEs, which would help more companies manage some of the costs of getting on the export ladder.