Despite a £1 trillion export target and accompanying advertising campaign by Government, the number of businesses exporting has not changed in the last two years, according to research by ICAEW.
Only 53% of businesses are exporting - no change from 2014 – and nearly all (96%) non-exporters have no plans to sell overseas in the next 12 months.
Here in the north east we are well versed in the good news message: this is the only region in the UK with a positive balance of trade. This is largely down to Nissan and the excellent performance of our major river ports, and this perhaps masks the contribution of many smaller businesses. But there’s always room for more, and there’s plenty of support and advice available for those wishing to explore exporting. From guidance on regulation and currency to advice on customs, help is there for those wishing to become first time exporters.
For nearly a third (30%) of exporters, over half their turnover comes from trading overseas, highlighting the importance of global markets, in which the USA and Europe remain the top export destinations. This is even more significant this year with weaker domestic demand, a sharp decline in sterling and a rise in input prices expected, indicating that export growth will overtake domestic sales in 2017.
Our ICAEW research revealed fewer exporters are planning to enter new markets in the next 12 months, down from 33% two years ago to 25% in 2016. What’s even more disappointing to note is that nearly all of those businesses currently not exporting (96%) have no plans to do so in 2017. Despite all the help that UKTI, now DIT (Department for International Trade), make available this has not changed since 2014.
There is no difference between the plans of SME and large companies, with most citing that they have a sufficient market in the UK (41%) so do not need to expand their horizons. Worryingly, both for us as a region and for the Government, only 1% of businesses plan to start exporting in the next 12 months while an additional 1% are considering it. Only 5% of SMEs have exported for the first time in the last two years.
In a post-Brexit world where business confidence is low and investment sluggish, is it time to incentivise exporting? I do worry for those companies who believe they have enough of a market in the UK, so are not doing business overseas with weakening domestic demand expected in 2017.
I know that our local DIT people do a lot of good work with SMEs in this region and that banks can proactively assist businesses, but perhaps the Government should look at funnelling some of their money into directly incentivising business into export. One example could be introducing a voucher scheme for companies researching and developing in overseas markets.
www.businessadviceservice.com to find your nearest BAS participating chartered accountant.
ICAEW (Institute of Chartered Accountants in England & Wales) is a professional membership organisation supporting over 146,000 chartered accountants around the world.
For information please visit www.icaew.com