There is no doubt that the economic recovery is well underway. However, there is still a long way to go, with experts highlighting the importance of exporting and international business.
The recent Budget saw chancellor George Osborne announce the government would be doubling its lending capacity for exports to £3 billion.
In advance of delivering the annual address, the Confederation of British Industry (CBI) released a statement urging the government to use it to focus on investment and exports, as well as energy prices to enable energy-intensive firms to compete internationally, in spite of higher operational costs.
CBI director-general John Cridland said the chancellor should “encourage firms to get on planes to sell their wares around the globe”, by means of promoting and supporting exports.
‘Over-reliance’ on UK consumption could be risky
As the UK chairman of KPMG Simon Collins points out, an over-reliance on the UK market could be a risky business – quite literally. While the economy is improving, purchasing power and disposable income are far from what they were just a few short years ago, both for members of the public and companies alike. This could mean firms might have a hard time keeping a stable domestic cash flow.
Mr Collins explains how every effort needs to be made to help businesses to tap into overseas markets in countries that are experiencing rapid growth, such as emerging economies, describing the improved access to export finance as “fundamentally important”.
Meanwhile, corporate finance director Jeremy Barker added that the extra support could have the potential to close the competition gap between the UK and other leading economies, which currently have better export finance programmes in place. It would also mean UK exporters could offer more competitive prices overseas, which would inevitably only help to drive growth.
Don’t forget the UK completely, though
Nevertheless, the need to focus on export does not mean that businesses should be discounting their homeland. The UK still has a huge amount to offer.
A scheme to encourage budding young entrepreneurs from all over the world to come to the UK and kickstart their businesses on our shores will see over 30 teams from 15 different countries relocate to the UK by June 2014. These include the US, China, Jamaica, Brazil, India, Romania and Argentina.
It is hoped the UK Trade and Investment’s (UKTI’s) Sirius Programme will not only position the UK as a great place to launch a company, but also create jobs and promote foreign investment.
This follows a report by KPMG that named the UK as the fourth most competitive international location to do business, just behind Mexico, Canada and The Netherlands. Italy, the US, France, Australia, Germany and Japan were also analysed.
According to the findings, despite coming fourth overall, the UK came second for corporate services, third for digital and fourth for research and development, and manufacturing.
Factors determining the ranking included operational costs and those concerning competitiveness, such as education, infrastructure, economic standing, labour conditions, rules and regulations, and the overall cost of living.
The results have been supported by real-life situations in the business world, such as the fact that Japanese electronic firm Hitachi has moved its global rail operations from Japan to the UK. Last July, the manufacturers won a £1.2 billion contract to manufacture the next generation of inter-city trains at its factory, currently being built in Newton Aycliffe, County Durham.
This comes after the EEF/BDO Q1 Manufacturing Outlook survey found the manufacturing growth forecast for the UK remains strong at 2.7 per cent. With the sector feeling more optimistic about their prospects, the survey recorded its highest result ever for recruitment and investment intentions.
Furthermore, at the start of this month, minister for universities and science David Willetts announced several new investments aimed at making the UK the best place in the world to do science.
So, it would appear the best approach is a delicate balance of promoting exports and overseas trade, while at the same time encouraging foreign investment and welcoming global talent to our shores. One thing’s for sure, embracing globalisation is the way to go.