• BCC publishes the results of its international trade survey highlighting the untapped potential of service sector exporters in rebalancing the UK economy
• The BCC calls for action to tackle language, regulatory and funding barriers to encourage potential exporters to take their first step towards doing business overseas
• John Longworth: ‘If we can convert this untapped export potential into a reality, this could go a long way towards eliminating the overall trade deficit and rebalancing the economy.’
The British Chambers of Commerce (BCC) is today releasing further results from a major international trade survey, which highlights the untapped potential of businesses within the service sector to rebalance the economy towards exports.
The results, collated from more than 1,565 service sector firms within the UK, show that 18% of service sector companies are on the verge of exporting. The service sector is performing well and growing, and provides huge opportunities for export growth. But the BCC is calling for more to be done to support potential exporters in taking that first step, as this could go a long way towards eliminating the UK’s trade deficit by 2020 – an ambition shared by the BCC.
Barriers and calls to action
Reflecting on their experience of exporting for the first time, service sector firms identify the biggest barriers to entering new markets. These barriers must be addressed if we are to support those firms who are on the verge of exporting in taking that initial first step:
Barrier: Excessive overseas regulation was the largest barrier to trading internationally identified by almost one third of service sector exporters (32%). Call to action: The BCC is calling for a reduction in red tape, including the completion of the EU Single Market in services.
Barrier: One quarter of service sector exporters (26%) reported that language and cultural differences are a barrier to exporting Call to action: The BCC is calling for foreign language learning to be made compulsory between the ages of 7 and 16 to help entrepreneurs become more globally minded.
Barrier: Exporting firms also identified a lack of funding (24%) as a barrier towards exporting for the first time. Call to action: The BCC is doing its bit by working with UK Trade and Investment and the Foreign and Commonwealth Office to develop an overseas network of Chambers and business groups to support British companies looking to trade in markets across the world. But the UK should be matching the efforts of countries like Germany that invests much more in its bilateral Chamber Network. Furthermore, the UK banking sector could and should do more to provide businesses with the working capital they need to fund exports.
Additional findings from within the survey:
Untapped export potential and barriers facing UK service firms
• Of the service sector firms surveyed, 23% are currently exporting. This is only one percent higher than in 2013. • An additional 18% of service sector companies (almost one in five) are on the verge of exporting – the same figure as last year.
More service sector exporters need to target emerging markets
• Europe (81%), Asia including the Middle East (54%) and the Americas (48%) remain the largest target markets for service sector exporters.
• The BCC is encouraging more service sector firms to look beyond traditional markets for export opportunities. Africa for example has been identified by the IMF as having one of the largest GDP growth prospects, with an increased demand for services in countries such as Nigeria. • Encouragingly, 32% of exporters are already trading with Africa but there is the potential for this figure to become even higher.
Professional services are leading the way
• Professional services (35%) have the largest share of service exports, followed by financial and business services (25%).
• Education and training contributes 22% of service exports and IT and communication services account for 20%.
Commenting on the findings, John Longworth, Director General of the British Chambers of Commerce (BCC) said:
“The services sector could hold the key to unleashing the export potential of the UK – with its large trade surplus playing a significant role in offsetting the UK’s goods trade deficit, totaling more than £100bn. This proves that the sector is strong, but if we can convert the remaining untapped export potential into a reality, it could go a long way towards eliminating the UK’s trade deficit by 2020 – an ambition shared by the British Chambers of Commerce.
“We need a culture change in the UK when it comes to international trade. This means more investment, stronger language skills and a global mindset instilled in people from a much younger age. There is no reason why we shouldn’t be matching the level of export support provided by our major international competitors, like Germany, which spends ten times more on its bilateral Chamber Network than the UK. Having places to go and people to meet in market when business people step off the plane is key to helping make these connections, and selling goods and services into fast-growing global markets.
“The results also highlight that a shortage of relevant skills is undermining the UK’s export performance. To nurture the next generation of exporters we need to encourage young people to gain experience in international trade, by offering them a range of vocational subjects, such as foreign languages, that prepare them for the wide-range of opportunities available in today’s globalised world.
“Only a collaborative approach from the government, Chambers of Commerce and business groups in the UK and overseas and the private sector, will reduce the barriers to international trade – and make significant headway towards rebalancing the UK economy in the long-term.”