Britain must reverse its appalling export record in high-growth markets
EUROPE continues to dominate the agenda, as the Prime Minister’s eagerly-awaited speech on the subject lies on the horizon.
As Europe’s financial capital, there is no doubt that this issue is of critical importance to the future prosperity of London and the UK. The EU accounts for half our exports and is responsible for a similar proportion of foreign direct investment into and from the UK.
But in many ways, these figures highlight the need to focus on the bigger picture, as the global economy rebalances. The fact that, as recently as 2009, we exported more to Ireland than the BRICS underlines – as the chancellor noted last year – how long it has taken the UK to build upon its already established patterns of trade, and to realign resources according to our long-term strategic interests.
A sustainable export-led recovery requires UK firms to pivot towards high-growth markets. It is concerning, therefore, that our non-EU exports have actually decreased over the past year.
From my experience of working with Sweden over the past three decades, I know how the Scandinavian country’s export sector has been an engine for delivering jobs and growth in industries as wide-ranging as telecommunications, manufacturing, pharmaceuticals and indeed banking. This has been driven by recognition of the need to focus on fast-growing markets, particularly in Asia and Latin America.
Sweden – like the UK – has set itself an ambitious goal of doubling exports. But it aims to do this in a shorter timeframe: doubling exports by 2015 from a 2010 benchmark, compared to the UK’s aim to do the same by 2020 from 2012.
We need to increase our share of trade in high-growth markets if this progress is to be accelerated. That can only be achieved by working harder to encourage more UK small to medium-sized enterprises (SME) to export, and by becoming better at identifying and winning high value opportunities across the globe.
This is about making these opportunities available all the way down the supply chain – from the largest multinational to the smallest SME. In fact, I am currently in Muscat, leading a City business delegation that aims to achieve just that by raising awareness of potential partnership opportunities with Oman.
Of course, this strategic realignment does not suggest for one moment that UK firms should ignore Europe. But it cannot be right that – according to economists at Citigroup – Britain has the lowest share of exports going to the BRICS in the European Union.
The opportunities are out there. Business and the government need to work together to prove why the UK should be seen as the partner of choice in high-growth markets. Now is the time to export our way to growth.
Roger Gifford is lord mayor of the City of London.