Government must do more to support an export-led recovery

If the government is serious about encouraging British exports as a major source of job creation and economic growth, it must resolve problems around export trade finance, according to a new report by the British Chambers of Commerce (BCC).

The business group says that some form of trade finance underpins 90% of all global exports, easing the flow of international trade by moderating its risks. However, the BCC argues that UK firms are still experiencing severe difficulties securing essential export trade finance, even though the worst of the downturn has passed.

In a joint survey with the Greater Manchester Chamber, the BCC surveyed over 250 exporting businesses. The survey found that:

• One in eight businesses that used export trade finance had experienced problems securing it over the last year.
• Worryingly, nearly half of firms who had faced problems said they had lost business to exporters from countries with state-backed export finance schemes.

Unlike comparable trading nations, such as Germany and Holland, the UK has refused to intervene over the past two years to ensure viable firms secure the export credit they need to fulfill orders. This failure to intervene, the BCC claims, is putting British exporters at an obvious disadvantage.

The report recommends that the government act quickly to help those firms still struggling with export trade finance, and that it prepares for future market shocks by ensuring a state-backed solution is available whenever needed to protect Britain’s exporters.

Commenting, David Frost, Director General of the British Chambers of Commerce (BCC), said:

“If the government is serious about encouraging British exports as a driver of employment, economic growth and prosperity, it must resolve blockages in the finance that underpins UK global trade.

“Our exporters need to be able to compete more effectively with rivals on the Continent and further afield, who are currently better supported during difficult economic environments or in riskier foreign markets.

“Chambers of Commerce across the country are well placed to help businesses grow by offering practical exporting advice and support. The government also needs to play a role - by ensuring that export finance is not a barrier to the UK’s trading potential.”

Angie Robinson, Chief Executive of Greater Manchester Chamber of Commerce, added:

“There are real opportunities for business, even in these difficult economic times, in the global marketplace. Chambers work with businesses and UKTI to help companies of all sizes in all sectors to spot the opportunities and capitalise on them.

“Exporters need assistance. We need to help enable companies to manage their risk, and get on with what they are really good at, doing deals and making sales.

“Favourable exchange rates for UK exporters have not led to the expected level of exports we should have seen, and the results of this survey help explain why. Without an adequate state-backed export finance scheme, British businesses will continue to lose out to overseas competition.

“The conditions are right for an export-led recovery, but we will continue to fall behind our major competitors unless the government takes decisive action. Compared to the hundreds of billions pumped into the banking sector, the support required by exporters is small, but it would act as a shot in the arm for the whole economy; creating jobs, securing the recovery, and ensuring that Britain’s economy remains competitive.”

Click here to download a copy of the report in PDF format>>

Ends

Media Contact:

Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk

Notes to Editors:

1. Case studies are available on request.

2. The purpose of nearly all export finance schemes is to help a country’s exporters in difficult markets, which the private sector will not cover, or during market difficulties (like recession) to ensure a continued ability to trade. Export finance generally involves either a letter of credit or export insurance.

3. A letter of credit is a method of payment underpinned by a bank’s undertaking to make a payment to a named beneficiary, against the presentation of documents which comply strictly with the terms of the letter. Its main advantage is in providing security to both the exporter and the importer, but the security offered comes at a price.

4. Export trade credit insurance guarantees lines of payment between an exporter and their customer. It is vital for many SMEs that trade overseas because the risks are often greater than operating domestically.

5. 253 businesses from the Manchester city-region were surveyed by telephone in conjunction with Greater Manchester Chamber of Commerce between 15 and 22 January 2010.

6. The House of Commons Business Select Committee’s latest report, Exporting out of recession, suggested that Chambers of Commerce are well placed to help businesses grow through exporting. It also calls for a state-backed ECI scheme.

7. The ONS releases UK trade deficit figures today (9 March).

British Chambers of Commerce: 150 years of helping business | 1860-2010
BCC Annual Conference, 18th March 2010: www.bcc-preparingforchange.co.uk

The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people