On the road to £1 trillion of exports by 2020?

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2011 was a record year. Goods exporters sold more than ever before to markets including Hong Kong, China, Brazil, India, Malaysia, Pakistan, South Africa, Singapore, Thailand, Taiwan, Russia....

EEF's latest research, in partnership with RBS, suggests that this is no one off. UK manufacturers are going with the grain of global growth; a focus on multiple emerging markets supported solid growth in orders over the past year even as dark clouds settled over Europe and more companies expect to see stronger growth coming from these markets over the next five years.

In other positive export news:

  • Manufacturers are more likely to export (55% of all companies compared with 31% in the economy as a whole) and across EEF members around two-fifths are export intensive companies, with half of more of their sales to overseas customers;
  • Nearly 65% of our survey respondents reported an increase in total export sales over the past 12 months, with nearly a fifth seeing growth of more than 20%;
  • Forty-five per cent of respondents report being more interested in exporting to new markets compared with 12 months ago;
  • In the next 12 months, India and South East Asia are the front-runners for growth, with just over 30% of those surveyed expecting to see orders growth;
  • Looking beyond this year China is expected to leapfrog the other markets with almost half expecting strong Chinese demand to be a driving force behind export sales within five years.

This is important - particularly now - for rebalancing our economy. The decade preceding the financial crisis spending by households and government were dominant components of UK economic growth. Overleveraged households and ballooning public sector deficits have necessarily reduced the contribution that both sectors will make to growth in the coming years. This has put tradable and investment intensive sectors in the spotlight as the primary drivers of economic expansion.

Manufacturers ambition and ability to capture growth opportunities in fast growing markets will also be important in meeting the government's target of doubling UK exports by 2020. Our survey, and the official statistics, would suggest that manufacturing is in good shape for the challenge. However, the journey from export strategy to success is not straigntforward. Our research identifies a range of perceived barriers to exporting to unfamiliar emerging markets, which may hold back internal decision making to push ahead with export strategies. There are also some real, but surmountable, hurdles.

Barriers to entry may be in-country, such as business practice or language differences; finance related such as exchange rates or poor credit protection; or awareness related, with many companies saying they have a lack of knowledge about the opportunities out there for their business. Some of these barriers are perception issues but many are also rooted in the reality of exporting to these markets.

Our research provides some optimism that there are foundations to build on the growth in exports to new markets that we have seen through the recovery so far. We have got the ambition of many manufacturers, we also need to ensure that is matched with quality market information and support and good UK engagement in removing trade barriers

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Chief Economist

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