The government’s £1 trillion export target and advertising campaign has failed to deliver any progress over the last two years according to research by ICAEW, which says there has been no change in the number of businesses exporting, although total exports rose in the latest official statistics
The institute says a survey of some 650 chartered accountants working in businesses around the UK during late 2016 found that only 53% of businesses are exporting, while nearly all of non-exporters have no plans to sell overseas in the next 12 months.
Although the ICAEW study found no tangible growth in the number of overall exporters, the latest official numbers released in December showed that in October 2016 the value of exports (EU and non-EU) were up 5.4% (£1.4bn) to £26.8bn, marking an 8.2% rise since October 2015. Imports (EU and non-EU) dropped to £39.6bn, compared with £45.5bn in September 2016. While the UK remains a net importer, with imports exceeding exports by £12.8bn, there are signs that the weaker pound post-Brexit has boosted exports.
The US and Europe remain the top export destinations and for nearly a third of exporters (30%), more than half their turnover comes from trading overseas.
ICAEW argues this is even more significant with weaker domestic demand, a sharp decline in sterling and rise in input prices expected, indicating that export growth will overtake domestic sales in 2017. Fewer exporters, however, are planning to enter new markets in the next 12 months, down from 33% two years ago to 25% in 2016.
Nearly all of those businesses currently not exporting have no plans to do so (96%) and this has also not changed since 2014. There is no difference between the plans of SMEs and large companies, with the most cited reason being that they have a sufficient market in the UK (41%).
Just 1% of businesses plan to start exporting in the next 12 months while an additional 1% are considering it, and only 5% of SMEs have started exporting in the last two years, ICAEW found.
Of those who are looking to expand overseas less than a fifth of exporters would use government departments which promote international trade, such as the Department for International Trade (DIT), for information and advice.
Stephen Ibbotson, ICAEW director of business, said: ‘This research illustrates that government is failing to encourage businesses to export goods internationally, despite a five year, multi-million pound government campaign.
‘In a post-Brexit world where business confidence is low and investment sluggish, it’s important that exporting is incentivised. The worry is for those companies who believe they have enough of a market in the UK, so don’t export, as weaker domestic demand is expected in 2017.
‘The government should look at funnelling some of the money from DIT into directly incentivising business into export. One example could be introducing a voucher scheme for companies researching and developing in overseas markets.’
