Help SMEs and UK exports will blast into orbit

The recent productivity plan published by the Government mentioned a desire to mobilise the whole of Government behind exporting.

Given that we are currently well behind the Prime Minister’s target of £1trillion of exports by 2020, and 100,000 new companies exporting, this is long overdue.

This needs a massive shift in priority away from large business to SMes (small and medium- sized enterprises), and it starts with an export finance system to suit the demands of a 21st century business world.

In June, UK export Finance ( UKEF) published its annual report, which shows it handed out £2.7bn in export support, through guarantees, insurance policies, and loans – up from 2013-14.

however a closer look at the figures shows that nearly half (45pc) of all this went to just one company – Airbus – through its contract work. In fact, UKEF gave direct support to just 233 companies.

In its report, UKEF estimated that ‘at least 6,000’ firms benefited from its export support through being part of the supply chain to those companies. While UKEF is rightly proud of its contract work with Airbus, there does not appear to be an urgency across the board to assist small and new exporters.

It is symptomatic of an approach to exports where the Government has set a lofty goal then almost assumes it will happen naturally. Yet the latest Small Business Survey by the Department for Business in March said that only 2pc of those not exporting planned to do so in the next year.

The Budget speech mentioned exports just twice, and one of those was on lowering the duty for single malt. Most Governmentbacked trade missions are the preserve of larger businesses, in the hope that any benefits trickle down the supply chain. however that is an outdated model in the current climate, and certainly not befitting the digital age we now live in.

Any new business that sprouts up is immediately heading online – whether through a website, social media, or via a trading platform – and some probably don’t even realise that they are exporting or where their customers are.

UKEF aims to support businesses while operating at no net cost to the taxpayer – which would go some way to explain why SMes, traditionally seen as the riskiest of ventures to back, aren’t supported as much through the system.

however, if you lend to these fast-growing small businesses then they can sell and trade more, be more productive, hire more staff, pay more in tax, and make more money for the exchequer than they receive. It’s an economic no-brainer.

There’s a gap in the market for a dedicated UKEF product for new exporters.

To its credit, it is beginning to innovate in areas such as Islamic finance products, so it really isn’t a stretch to consider products for those new to the idea of trading internationally.

Whether it is more finance, or export insurance, this would enable our dynamic small businesses to exploit faster- growing markets outside of the Eu, without UKEF falling foul of Eu state aid rules.

AND with sterling getting stronger, new dynamic businesses must be looked after lest they be put off taking the leap.

The Government has recognised that this is a need – mentioning in its recent productivity plan that the British Business Bank will work with UKEF to address the access to finance challenges facing SMes. But the danger is that this talk doesn’t result in the stepchange needed to support new exporters, particularly home-based businesses.

The Government simply has to move with the times.

Our approach is an analogue system trying to keep up with a digital age.

If the Government is serious, it needs to make export financing for small and new exporters a priority. Only then does it stand a chance of meeting its export goals. As things stand, its outdated model means those targets are a laudable pipe dream.