UK small businesses urged to seize export opportunities

The United Kingdom is now the fourth largest exporter in the world. Yet as few as 10 percent of businesses currently export, according to the country’s largest business lobby groups. The Confederation of British Industry is calling on the government to ensure companies of all sizes can take advantage of the global export market and become more productive, resilient and innovative.
  • The services export market presents significant opportunities for SMEs that take a structured approach to expanding their global footprint.
  • The top UK market for goods and services is the United States, with EU countries comprising the remainder of the top five.
  • The UK Government is aiming for exports to total £1 trillion by 2030.

by | 31 May, 2024

Aerial view of a shipping container port

The latest statistics show that the value of goods exported from the UK in the 12 months to the end of March 24 was £394.8 billion, with cars, generators and medicines the top exports.

The value of services exported, however, was more than 15 per cent higher, at £469.8 billion. These figures included a large contribution by professional services in business, finance, travel, higher education, architecture, insurance, computer and information and transport.

Emily Fry, a senior economist at the Resolution Foundation, says services trade has been growing quicker than goods long before Brexit – up 14 per cent between 2019 and 2023 and growing faster here than in France, the US and Japan. The Centre for European Reform notes that growth in services trade could have been even stronger if business had not been forced to overcome significant barriers to exporting to the EU.

For SMEs, the export landscape presents a wealth of opportunities to expand their global footprint with the right support.

Fry advocates for an aligned trade strategy that not only capitalises on existing EU ties but explores innovative agreements to unlock new avenues for growth. She says previous Resolution Foundation research found a significant change to the UK’s goods relationship with the EU was required to preserve the supply chains of the country’s most productive manufacturing sectors. Expanding innovative new agreements beyond the EU would support further growth in services.

Since leaving the EU, the UK has negotiated trade agreements with several countries and now has more than 70 trade agreements. It is still negotiating several more agreements, including with India, and a trade pact with Texas, the second-largest US state, that will benefit professional services.

The UK has also recently signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free trade pact with 11 countries. It will allow the development of trade with Asia among other regions.

The UK’s top markets

The top UK export markets for goods and services were the United States, which accounted for 22.1% at £191.5 billion, Germany at 7% or £60.8 billion, Ireland at 6.6% or £57.4 billion, the Netherlands at 6.2% or £53.6 billion and France at 5.2% or £45 billion.

For goods only, the top markets were the United States at £61.8 billion or 15.6%, Germany at £33.9 billion or 8.6%, the Netherlands at £31 billion or 7.8%, Ireland at £28.2 pounds or 7.1% and France at £24.5 billion or 6.2%.

For services only, the top markets were the United States at £129.7 billion or 27.6%, Ireland at £29.2 billion or 6.2%, Germany at £26 billion or 5.7%, the Netherlands at £22.6 billion or 4.8% and France at £20.5 billion or 4.4%.

Ambitious outlook for growth

The Government has set a target of achieving an ambitious £1 trillion worth of exports per year by 2030 as part of the 2021 Export Strategy.

The British Chambers of Commerce believes the UK has emerging strengths in professional services, as well as law, auditing and accounting. It highlights strong growth in service exports to the United States, something that could be attributed to American firms outsourcing work to the UK, it says. A key driver of this trend has been London, where world-leading firms are located, with its exports growing by nearly half between 2016 and 2021.

The Resolution Foundation wants greater investment to support SMEs, given global services are expected to continue to grow as a proportion of trade from 25 per cent to 28 per cent by 2035.

Next steps for aspiring exporters

Government department UK Export Finance has recently unveiled plans to help exporters win £12.5 billion in new business by 2029. It encompasses more financing opportunities for smaller businesses, including £10 billion to support business in developing markets, as well as a commitment to support 1,000 SMEs a year.

For SMEs considering a leap into export, accessing advice as well as funding support, is essential.

The British Chamber of Commerce (BCC) offers SMEs a detailed assessment of export readiness.

A structured approach is also key to capitalising on services trade. This means conducting thorough market research that includes market dynamics, competition analysis and cultural nuances.

The BCC encouraged vigilance about tax and legal implications, ensuring compliance with regulatory frameworks across jurisdictions. Identifying suitable sales channels or agents is equally crucial, laying the foundation for effective market penetration.

Finally, a comprehensive export plan should encompass financial considerations, return on investment analysis, marketing strategies, distribution channels, business models, and budget allocations.

Resources such as the UK Trade and Investment’s guide to export also serve as invaluable tools in navigating the intricacies of international markets.

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