From Theresa May promising to negotiate “maximum freedom” within the Single Market post-Brexit, to international trade secretary Liam Fox stating that the UK will “lead the charge” towards a world of open and fair business, international trade took centre stage at the Conservative party conference last week.
This, of course, would have come as little surprise. Post-referendum, the need for UK businesses to look beyond our shores and those of Europe has taken on much greater importance. I call this newly required mind set ‘think global’.
In fact, the ability of UK businesses to successfully increase the amount of trade they currently undertake with international partners will be crucial to the future success of the UK as a whole, so the stakes are high. To put some numbers to this, a recent report by World First and the Centre for Economics and Business Research (CEBR) found that due to the small and medium-sized export shortfall, the UK economy is losing out on £141bn a year – that’s more than the current health and defence budgets combined.
It is not just about UK plc either. Increasing international trade, particularly through exporting, is one of the best ways for businesses to accelerate their growth. In the current climate in which we find ourselves – a hugely weakened pound and the chance to reset our existing global position – the opportunity for smaller businesses to trade across borders is now. Our research shows, the typical SME exporter generates an additional £287,000 a year in revenue, thereby highlighting the size of the prize at hand.
But barriers persist. From culture and language, to logistics and regulation, taking the first steps to exporting can be daunting – and of course this is not to mention the barrier generated by the uncertainty presented by Brexit. As a result, only 5 per cent of SMEs have plans to start exporting in the next five years, which if it doesn’t change, could pour cold water on the Government’s vision for the future.
Consequently it is clear to see that much more needs to be done in terms of inspiration and practical support for smaller firms to help them seize the growth opportunities that exist in global markets. I believe there are two key things that need to be done in order to achieve this.
‘Scale up’ minister
The creation of a government minister for scale-ups could go a long way in supporting businesses in their international development and drastically improve exporting figures in the UK. A representative in this capacity would spearhead the movement for increasing exporting overseas by improving trading conditions abroad, promoting the benefits of expansion and offering greater support to SMEs looking to make the leap from domestic to international markets.
Why is this needed when we already have ministers promoting trade? In my view, whilst blue chip and start up companies are well supported, those in the middle and the lower-middle market who may not have ever thought about exporting but have huge scale up potential, are often overlooked. This is where a dedicated scale up minister would come in.
Refined industry strategy
As part of the process of encouraging SMEs to engage with new markets, the government must take the time to identify the industries that would benefit from exporting more and which markets they would be most successful in.
Beyond the EU Single Market, there is significant untapped potential in emerging economies and SMEs should be encouraged every step of the way to explore such opportunities. Conversely, other sectors may benefit from more established markets such as the US or Canada. It is vital that SMEs are supported with a well-devised government-led industry strategy to ensure whichever markets they are looking to enter make the most strategic sense.
Through these initiatives, it’s hoped that we can change the mindset of our SMEs from one that doesn’t consider the opportunities of international expansion or views it as unobtainable, to motivate them into action and inspire them to think bigger.
For me, it is clear that the rewards outweigh risks, both for individual businesses and on a macroeconomic level, and in such a time of change for the UK, there has never been a more important moment for SMEs to seize the opportunities offered by international trade.
Now is the time to think global.