For the first time in almost half a century, the UK has its own independent trade policy - and the government has ambitious plans to increase trade and deliver prosperity in response.
This starts with ensuring that trade is tailored to the needs of British firms and the British economy, with new export opportunities for UK firms, increased investment and additional jobs across the UK.
As per the government’s 2019 manifesto, the broad approach to deliver this is to:
- Negotiate free trade agreements (FTAs) covering 80% of UK trade within the next 3 years, starting with the USA, Australia, New Zealand and Japan
- Increase market access for British businesses by building stronger links to the Commonwealth
- Lower the costs to business of trading with emerging markets through enhanced export finance
- Help update the multilateral trading rules by leveraging our new independent seat at the WTO
- Incentivise inward investment through the delivery of ten new freeports around the UK.
What does the Budget say about how the government will help achieve these goals?
The Budget makes several practical announcements to help make trading overseas easier for British businesses, with a focus on ensuring companies from across the country have access to the right information and support. This is designed to support smaller firms to overcome basic barriers to trade.
- DIT will establish local champions based at key overseas posts to assist exporters from the Northern Powerhouse, Midlands Engine and Western Gateway
- DIT will increase the number of international trade advisers outside London
- DIT and the Department for Culture, Media and Sport will gain £8m in funding for a new Digital Trade Network enabling innovative UK companies to access new opportunities in the Asia Pacific Region
- DIT will benefit from increased resource and capability to identify and address market access barriers inhibiting UK trade overseas.
Elsewhere, the government prioritises support for exports in clean growth, among other sectors:
- UK Export Finance (UKEF) will expand face-to-face support for exporters focused on clean growth in the North of England and Scotland
- UKEF will benefit from a new £2bn lending facility for projects supporting clean growth and £1bn to support overseas buyers of UK defence and security goods and services
- The GREAT campaign will fund a £1mn campaign to promote the Scottish food and drink sector.
More widely, there’s a real focus on ensuring that the UK – across its regions and nations - remains one of the leading global destinations for inward investment. Measures here include:
- Plans to increase public R&D investment to £22bn per year by 2024-25
- More than £600bn to be spent on roads, rail, broadband and housing by the middle of 2025
- £5bn to be spent on getting gigabit-capable broadband into the hardest-to-reach places
- £1.5bn in capital spending on further education colleges
- Increases to the NICs Employment Allowance to cut the costs of taking on staff
- An extra £640m for Scotland, £360m for Wales, and £210m for Northern Ireland.
How do these measures support the government’s goals on trade?
Businesses will be pleased with some very pragmatic announcements to make trade simpler and easier for the swathes of small businesses across the country. CBI evidence has shown that up to 15% of firms in every region could be exporting but are yet to do so, so enabling more companies across the country to access expertise through a bolstered programme of international trade advisors – across the country and in post – can be a vital part of the government’s levelling up agenda. Having called for the government to plug the gap in trade staff, this is a win for business.
Similarly, enhanced support for UKEF will be welcomed by businesses across the UK. CBI members report that working with UKEF has often been a pivotal factor in their export success, helping to find financial solutions to tricky projects and enabling them to break ground in new markets. The provision of more face-to-face support across the UK will help spur more companies into international trade.
But new ventures often take time, relying on multiple trips abroad to meet new contacts in person before contracts can be agreed. Increased funding to support the SME trade show support scheme (TAP) and improvements to the number of trade missions organised by government can make a real difference in this regard. In our Budget submission, the CBI called for an uplift in financial support to SMEs through the TAP, recommending that funding be raised from the £6.5mn in 2019. We will continue to make the case for this on behalf of members.
Elsewhere, businesses will be keen to hear more information on the announcement that DIT will see greater resource to help address market access barriers. The government had significant successes in 2019 to open foreign markets to British products and services. But as the UK looks to re-develop its own independent trade policy, DIT should seek to become the world’s leading trade and investment agency. This will rely in part on having sufficient people in place, with appropriate expertise. On this front, there is certainly scope for government and business to work more closely on the detail of what limits UK firms from reaching their potential.