Budget 2021: what does it mean for international trade?

The government has ambitious plans to increase trade and attract investment to deliver a globally competitive economy.  While CBI members will welcome some of the pragmatic announcements designed to make trade simpler and the investment in key business enablers, there is still much a refreshed export strategy and a partnership with business needs to deliver to realise the Global Britain ambitions.

The opportunity and need to forge a more dynamic, competitive, and future-focused economy has never been greater. Global trade and investment is crucial to unlock the full potential of this vision and the government’s Plan for Growth.  

Announcements on the expansion of the Export Support Service and the new £1.4bn Investment Fund are welcome, but for companies across the UK to embrace exporting, the government should go further and incentivise exploration of new markets and develop initiatives with industry to increase business to business support. 

What does the Budget say about how the government will help achieve its Global Britain goals? 

The Budget made a few practical announcements to help make trading overseas easier for British businesses. Announcements included:  

• Over £45 million funding for the digital transformation of DIT’s export offering, delivered through an expansion of DIT’s new EU focused Export Support Service to cover all markets 

• Funding to facilitate trade and deliver a secure and effective border through:  

•  £838m over the three years to 2024-25 to complete the delivery of critical customs IT, including the new Customs Declaration Service  
•  £107m next year for the Trader Support Service, which helps traders move goods into Northern Ireland 

• The establishment of new trade and investment hubs in Cardiff and Belfast and the expansion of the existing trade and investment hub in Edinburgh, ensuring the benefits of the UK’s global trade policy are channelled across the UK. 

More widely, the government must ensure that the UK – across its regions and nations - remains one of the leading global destinations for inward investment. Unlocking investment depends not only on direct government investment but also investment in the business environment. Measures here include: 

• A new £1.4bn Global Britain Investment Fund to for the UK’s life sciences, offshore wind and automotive manufacturing sectors and £5.7bn in infrastructure to support levelling up 
• Skills - £3.8bn investment to be made in skills training by 2024-25; International trade skills are very high in demand, as part of HMG’s ‘skills revolution’ Chancellor has promised £1.6bn to roll out new T-levels for 16 to 19-year-olds, and £68m (by 2024-25) to level up the adult skills system 
• Digitalisation of borders - £461m capital funding for the Future Borders and Immigration System (FBIS). This will look “to modernise and digitalise” them with proposals including a US-style Electronic Travel Authorisation for visitors wishing to come to the UK 

• Northern Ireland – Over £1.6bn announced for the British Business Bank’s regional funds, which provide debt and equity finance to SMEs. Northern Ireland SMEs will be getting £70m funding from the budget, building on the British Business Bank’s existing programmes and as part of the government’s levelling-up programme 
• A new UK Global Talent Network, to work with businesses and research institutes to identify and attract the best global talent in key science and tech sectors

• Confirming eligibility criteria for the new Scale-Up Visa, to help make it quicker and easier for fast-growing businesses to bring in highly-skilled individuals.

How do these measures support the government’s goals on trade and investment?  

If the recovery is going to bed in for the longer term, then we need to get businesses investing. The £1.4bn Global Britain Investment Fund scheme is a welcome announcement therefore and it delivers on the integrated review commitment to invest in industries of tomorrow.   

Yet, businesses were hopeful that government would double down on the areas which really attract investment and growth such as innovation and skills. The commitment to spending £22bn on R&D has been pushed back to 2026/27. So, while the direction of travel is broadly good, our global competitors are investing with scale and urgency, the question is whether new commitments will go far enough or fast enough. 

The new Global Talent Network on the other hand is a positive development. With labour shortages biting in sectors from the lower-skilled to the high, this new network could prove a useful tool in some of our most exciting, higher-skilled industries alongside much needed funds to spur global investment into the UK.  

For exporters or those looking to capitalise on the opportunities overseas, the Export Support Services and its extension will be welcome. The free to use service offers practical advice and support on issues for firms. This service was an ask from CBI, our members and the wider business community and the government has listened.  If we are to transform the UK into a trading powerhouse, we need more companies exporting a greater range of products to an increasing number of markets. Our data shows supporting a new generation of SME exporters could boost UK export revenues by an additional £20bn by 2030. 

Much of this work can be encapsulated in the new Export Strategy which government is developing, a strategy which needs to bake in its end users – business – as much as possible and provide the necessary policy clarity to enable action.  

Whilst firms will welcome today’s measures, we remain in a high tax, low productivity economy with concerns about inflation. This budget missed the opportunity to redress those challenges with a major focus on investment and growth.