International Trade Week could not have come at a more important moment, particularly given the Bank of England’s prediction yesterday that the UK could be entering its longest recession on record.
With the UK economy recovering from the effects of Brexit, Covid and the Russian invasion of Ukraine, it’s vital that we do all we can to encourage businesses to trade internationally. Time and time again, it’s been found that businesses trading in overseas markets are more productive, more sustainable and more profitable.
It’s for this reason that the IOE&IT was delighted to support the Department for International Trade’s programme of events and conferences this week. We’ve been in Manchester, Birmingham, Preston, Leeds, London and at various virtual events evangelising about the benefits of trade.
We ran our own event in London on Tuesday launching our new report, Enhanced efficiency: Building a UK border fit for the 21st century, alongside Flint Global. We also hosted a free webinar on how traders can make the most of the UK’s new trade deals on Wednesday.
From the events that I’ve been to – and from what I’ve heard from my esteemed colleagues – it’s clear that government and industry needs to prioritise four areas in order to succeed in getting more businesses, particularly MSMEs, to trade internationally. These are: innovation, investment, coordinated strategy and education.
Innovation
At a policy level, innovation is needed because many of the challenges faced by MSMEs are codified in national legislation and international agreements. Our report estimates that administrative costs for trade with the EU have increased by 3.5% under the UK-EU Trade and Cooperation Agreement, for instance.
Talking to policymakers and businesses this week, it’s become clear that a more business-friendly lens needs to be applied when crafting new agreements. There are promising signs in the deals the government has signed with Australia and New Zealand, which each include chapters dedicated to MSME support. At the webinar on Wednesday, the digital agreement with Singapore was also mentioned, as it includes provisions to create greater market access for our high-tech exporters.
Innovation is also needed at the border, as our paper highlights. We’ve recommended a number of practical steps that government needs to take to ensure we have a robust, facilitating border strategy that can remove non-tariff barriers and enable easier trade. This is an exciting and fundamental endeavour which will require both investment and coordinated effort.
Investment
At Tuesday’s launch event, Sam Lowe, a partner at Flint Global, made the great point that a long-term investment strategy is needed, rather than a one-off lump sum. They key thing he said is that this investment will pay for itself, because the easier it is for businesses to trade, the more they will do so, and this will generate economic growth.
In the shorter-term, however, businesses need financial support to be encouraged to trade in the current challenging climate. Firms are currently struggling to navigate the costs of inflation, the impacts of various global supply chain crises and the volatility in the currency markets.
In a foreword to a report by the Social Market Foundation, which was supported by Amazon and was also launched this week as part of International Trade Week, I urged government to look at providing grant funding or zero-to-low interest loans to help businesses overcome the initial costs of international trade.
Coordinated strategy
Support for MSMEs needs to be coordinated across government as well, which is why the IOE&IT has been calling for the establishment of an MSME taskforce to raise awareness and provide information about the opportunities of international markets.
Back to the border, I also this week called for the government to set up a department and minister dedicated to border strategy. This is key because, without this, we risk there being a fragmentation in vision and implementation due to the number of stakeholders involved.
Education
Businesses continue to be put off international trade by the amount of new rules and processes that are involved. New trade agreements and border systems could lead to further change, of course.
That’s why education is so important. In the short-term, we need to support traders to learn how to make the most of the opportunities that international trade currently provides, which is why webinars like the one on Wednesday, which introduced some of the new rules in the UK’s post-Brexit trade deals, are so important.
Beyond that, we will need to educate traders about the changes that are coming their way at the border and in the UK’s future trade deals. We need to help traders to adapt, adopt and benefit from these innovations.
And traders agree with this. On a poll that took place during Wednesday’s webinar, two thirds of the attendees said they think education and training is what is needed to enable them to make the most of the UK’s future agreements.
Optimistic
It’s been great meeting so many people involved in trade this week including businesses, business-support organisations and policymakers.
Many of you will have heard me say that I’m an eternal optimist and there’s a good reason for this – if we can get more businesses to trade, the benefits for the UK economy and beyond will be great.
I’m glad to say that businesses are in agreement. An Institute of Director’s survey, published on Monday, found that more businesses are expecting to grow their trade over the next year than those that are not. On the webinar on Wednesday, it was also found that the majority of traders are already benefiting from the UK’s post-Brexit deals.
The events and discussions throughout International Trade Week have shown that the will is there to boost our exports. The challenge, for government and industry alike, is to now work together to make this a reality.