Big, bold targets stick in the public conscience and they often drive collective action to acheive them. In the UK, the most ambitious and memorable target from government in recent years was the one to double exports to £1 tillion by 2020. Ambitious and memorable it may be, but a recent report from Graham Cole on the UK's export performance has recommended a rethink. Is he right?
Targets - what's the point?
UK policy makers have had brief dalliances with targets - a plethora of public service agreements, numerical targets for qualifications, aims to be the best place in the world to do this, that and the other, fiscal rules, the UK's place in international rankings and so on......
The ones that stick are stretching but achievable and - most importantly - measurable. These seem to hang around the longest, are subject to a bit of debate and scrutiny and therefore have an impact on policies and spending decisions. The target, announced at Budget 2012, to increase UK exports to £1 trillion by 2020 is a pretty good example of this. It's been discussed in parliament on more than one occasion, it's been cited as a reason for increasing resources to UKTI and UKEF and if you pop the phrase into a search engine you'll see it's also been talked about in blogs (ok, this one) and in the media.
It's all upside then?
While there are good reasons for policy makers to focus action on a small number of carefully selected metrics, there are some downsides too. The biggest one being it doesn't look great if no progress is made towards meeting it.
The export target is again, a good example of this...
Back in 2012 exports of goods and services needed to grow around 2% each quarter to hit the £1 trillion mark by the end of 2020. But in reality, they've barely budged. There are a whole host of reasons you can throw into the mix to explain this - the eurozone crisis, exchange rates, a lower penetration into emerging markets, the effects of the financial crisis and a lack of business confidence to explore new markets.
But today the question is not why have we drifted off course, but should we pursue this target any further?
First findings from the Cole Commission
A new report from Graham Cole on how to tackle the UK's persistent trade deficit and boost exports, published today, recommends a rethink. The findings and recommendations are still a work in progress, but an emerging theme is the need for the next government to re-examine the target.
I don't read this as a recommendation to walk away from it, rather an ambition which equates to the UK out-exporting South Korea in just the next five years should be reviewed and reality checked. Indeed, the report also notes that "the fact that it (the target) is ambitious is all the more reason for reaffirming it and redoubling efforts to achieve it. The slippage so far is, indeed, an extra spur for consistently and single-mindedly performing better."
In with the new
The next government should be minded to set big goals for growth and with forecasts of an improving net trade position frustrated more often than note, some clear metrics about exports would help focus minds (especially with a Spending Review on the horizon). The straightforward target on the value of exports has its merits. But here's another three from us for consideration.
- The current account balance to narrow to its long term average of 1.5% of GDP by 202 from 4% now.
- The UK to maintain its current share of world exports at 3% over the next parliament.
- The increase the share of goods exports to emerging and high growth markets to a quarter from a fifth of total exports in the next five years.