Rohan Silva, David Cameron’s old Special Advisor for Tech and now founder of Second Home, the startup incubator just off Brick Lane was writing about post-Brexit trade in the Evening Standard on Monday, stressing the need to open up Britain to new markets, and particularly China and its rising middle class, whose spending power, he suggested, could exceed £5bn by 2020.
This is all well and good, however Haggerston Times took the opportunity to ask Rohan via twitter, “are we really post-brexit given that we won’t actually leave for another 2.5 years?” (remember, Article 50 has still not been invoked and the exit period, we hear, will take a minimum of 2 years)?
“Good question”, Rohan replied; “I think we need to start operating that way now, especially when it comes to global trade…”
“So abandon Europe altogether then? Shouldn’t we think about renegotiating existing deals with them too?” the HT asked.
“100%. But it’s not either / or – we can do both. Lots of hard work ahead… (Which is why I voted #Remain!)” came the instantaneous reply.
It is a lot of work – doubtless Britain’s entrepreneurs (wherever they may hail from) will rise to the challenge, and certainly George Osborne’s trip to Singapore, China and Hong Kong next week, where he will lead a trade mission alongside some of Britain’s most promising entrepreneurs in the financial and life sciences sectors, is a positive move. As Silva pointed out in his article, the chancellor has already done much to improve out trading relationships with the far East.
But we shouldn’t overlook the contribution the UKTI, and specifically the UKEF, the UK Export Finance division, has been making to our overseas exports.
On Monday, the government released a statement announcing the release of the UKEF’s annual report and accounts, which shows that the agency has supported the largest number of exporters in 25 years with a year on year increase of 23%.
The UKEF is the country’s export credit agency, and “exists to ensure that no viable UK export should fail for want of finance or insurance from the private market”. It comprises of a network of 24 export finance advisors, and has supported industry sectors including aerospace, construction, oil and gas, mining and metals, petrochemicals, telecommunications and transport. Doubtless we will be seeing the likes of FinTech and Health-Tech added to that list in the not-too-distant future.
Its products include bond insurance policies, credit financing for buyer’s and suppliers, direct lending, export insurance and refinancing, working capital and letters of credit.
Last year the UKEF supported more than £800m in sales overseas and issued $1.8bn in export support – a real fillip for the government’s Exporting is GREAT campaign which hopes to empower 100,000 new companies to export overseas by 2020.
In total, 77% of the exporters who received help from the UKEF in 2015-16 were SME businesses, and the UKEF estimates that 7,000 companies in exporter supply chains indirectly benefitted from their help.
UKEF helped companies export to 69 different countries, the £800m of new export contracts they helped to support through trade financing products. Since 2011, when they were introduced to counteract the effects of the economic downturn, the products have supported some £3bn of UK export contracts – £1.8bn of which was for SME businesses.
UKEF’s network of advisors held more than 2,500 one-to-one interactions with UK companies and more than 1,500 with their intermediaries during 2015-16, and are in the process of developing a new digital interface to support customer applications, which they say will be ready during 2106-17.
The past year also saw a 500% increase in the amount of direct lending support issued, and the adoption of the Equator Principles as well as a commitment to meet OECD recommended standards.
“UKEF is helping to make exports happen, playing a vital role in the whole-of-government push for 100,000 new companies to sell overseas by 2020”, says Lord Price, Minister for Trade and Investment.
“This year’s results show that we are making significant progress in reaching a wider customer base. We will continue to be innovative and flexible, anticipating the needs of exporters and finding ways to meet them”, added Louis Taylor, CEO of UKEF.
So, although there is much to be done in the wake of post-Brexit, and Theresa May’s coronation as PM today, as Cameron steps down (adieu, Larry the Cat!) may well speed up a process Cameron was reluctant to initiate, let’s not forget the processes, checks and balances that have already been put into place to support the nation’s exporters, who will be under more pressure than ever in the coming years.
Well you know what they say; “pressure makes diamonds”. Let’s hope our ability to open up our products and services to new markets and customers turns out to be one of the best things about Brexit, but let’s not forget the incredible efforts that went into creating our existing overseas trade, from the largest corporates right down the humble but ambitious startups we have invested so much time, energy, and money into developing.
It’s time to look forward – but let’s not throw the baby out with the bathwater.