Businesses have highlighted concerns about the threat to UK exports if the UK breaks away from the European Union.
These are among the findings of this year’s International Trade Survey, commissioned by The Institute of Export (IOE), conducted by Trade and Export Finance (TAEFL) and sponsored by AIG.
The survey highlighted that although 72% of UK companies are more confident about business prospects in 2014 than in 2013 (up from 59% 12 months ago), almost 50% regard continued EU membership as critical to their business, up from 45% last year. This figure rises to 58% for businesses with a turnover of more than £10 million.
Launched in Westminster, this is the fifth year that the IOE has commissioned the survey – the largest independent survey of its kind which captures the views of 2,800 companies.
IOE Director General Lesley Batchelor says: “The UK government has set a target to raise the level of exports to £1 trillion by 2020. Encouragingly, the survey findings show that 69% of UK businesses expect to increase their dependency on exports over the next five years but there is a real concern that UK exports are not rising fast enough to meet the government’s target.
“UK exports reached £304 billion last year – up from £300 billion in 2012 – and as the economic recovery takes hold export levels should accelerate. However, the EU remains the UK’s largest overseas market, accounting for around 60% of national exports. The negative impact of the UK leaving the EU would be significant on UK companies and the balance of trade.”
The report has identified three key areas that companies believe would help them to grow their business and boost exports – less red tape, increased government support and help getting paid.
Adds Lesley: “While companies are clear on the importance of staying in the EU, a significant number would like to see some renegotiation on terms. 41% said that less red tape would be the single change to the UK’s terms of EU membership that would most benefit their business.
“Companies also need help in compliance with local regulations in overseas markets, but an information gap exists regarding government support for exporters – only 2% see this currently as driving export growth. The IOE’s training and education programmes work hard to ensure that businesses understand the range of initiatives in place to support them in searching for new markets for example through UK Trade & Investment and UK Export Finance, but more should be done.
“Our education programmes are just part of the work needed to make businesses aware of the risks involved and how to mitigate these using all the financial products available. Concerns around non-payment, which was cited as the most significant risk by 42% of businesses is often related to scant understanding of how world trade works. While 49% of companies rely on open account payment, only 37% purchase trade credit insurance, something that can help allay fears about not getting paid; a recent report by Intrum Justitia revealed €360bn has been written off in late and unpaid debts across Europe.”
Will Clark, Head of Trade Credit at AIG in the UK, comments: “Business confidence in the UK is rising. However, awareness of the increasing range of risks – political, economic and regulatory to name just a few – posed by entering into new markets, and how best to protect against them, appears to be going in the opposite direction.
“The fact that non-payment tops exporters’ list of concerns yet the number of companies buying trade credit insurance is in decline means that the insurance industry needs to respond by developing more innovative products which better address buyers’ needs and concerns. Significant progress has already been made, for example in introducing policies with non-cancellable limits which provide greater certainty to buyers. However, more needs to be done, both in terms of product development and in making buyers aware of the benefits of trade credit insurance, not only to protect them against insolvency but to help secure financing that allows them to invest and deliver future growth.”
To see a full copy of the report, visit http://www.export.org.uk/images/pdf/International_Trade_Survey_2014_Report.pdf
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