UK firms must look outside the EU for exports, urges Chamber

Posted on 15 May 2012

Smaller firms need more support to trade with high growth markets, says the British Chambers of Commerce.

Large businesses are still far more likely to export to high growth markets than their smaller counterparts, with regulation and export tariffs topping the list of barriers to greater penetration.

However, the manufacturing sector was the most enthusiastic about opportunities for growth in developing economies.

In its survey of 8,000 businesses, the British Chambers of Commerce found that there is still too much focus on static markets such as the EU.

It stated that UK exports are held back by a focus on traditional or mature markets at the expense of larger, faster-growing economies.

The EU remains the most popular destination for exports, with 88% of respondents selling their products or services to the EU. This compares to 47% of businesses that export to BRIC countries (Brazil, Russia, India and China), and 55% to other Asian and Middle-Eastern markets such as Thailand and Saudi Arabia.

However, while nearly three-quarters (73%) of large firms trade with BRIC countries, only a third (32%) of micro firms do business in these fast-growing markets.

The survey also asked exporters where they see the greatest opportunities for growth in the next twelve months. Two-thirds (67%) of large exporters see the BRIC economies as providing the most export growth, but this falls to around half (49%) among medium-sized firms, and a third (33%) for micros.

Smaller businesses believed that the EU offers the greatest opportunities for export growth as it the infrastructure is already set up and the costs of getting to grips with BRIC markets are more substantial.

Export sales among UK firms are hindered by several barriers, from languages and cultural differences to overseas public sector procurement rules. Overall, regulation and export tariffs top the list of barriers for exporters. Those trading in Africa quote political risk as the biggest concern.

British Chambers of Commerce recommended a series of measures to support trade into new and growing markets, including sharing knowledge on foreign bureaucracy, opening up new markets through free trade agreements and re-establish foreign languages as core subjects within the UK national curriculum.

It suggested that the government should look to create bilateral free trade agreements with India and Japan and further liberalise trade with the United States.

John Longworth, director general of the British Chambers of Commerce, said: “The government must provide more targeted help and advice for smaller firms to help them take their first step in trading with these fast-growing economies.”