Analysing British Exports in for a post-Brexit world
It’s certainly topical to discuss British export strengths with the latest announcements regarding the UK’s departure from the EU. While the latest draft deal doesn’t incorporate trade deals, it gives us valuable time to secure those agreements at the end of our transition period in 2020. Many commentators have observed that the opportunity to increase our exports to markets beyond the EU represents a potential benefit. While Brexit might be seen as a ‘wake-up call’ for UK companies that have operated primarily within the comfort zone of the EU’s single market and customs union, the reality is that there has never been anything stopping UK companies exporting more widely in the past. The absence of free trade agreements or ‘frictionless’ customs procedures does not mean that a UK company cannot export. Nor does the presence of a free trade agreement or single market guarantee export success. Financial effectiveness and physical supply chain efficiency will certainly be enhanced by the removal of tariff and non-tariff barriers, but the underlying driver for export success is demand for the goods and services supplied by UK companies.
The UK continues to be a world leader in services, particularly in the finance sector. This advantage need not be restricted to large financial institutions. Smaller, niche consulting businesses such as ours, have also enjoyed success in international markets where our market insights and practical experience are seen to add real value. The same is true of the engineering world where both large multi-faceted businesses and smaller engineering consultancies can successfully penetrate overseas markets.
The UK has strength in manufacturing industries such as automotive, power generation and aerospace. In addition, the UK has a strong export proposition in pharmaceuticals. Developments in robotics, artificial intelligence, predictive analytics and 3D printing are changing the way in which supply chains can be configured. UK companies have the potential to exploit these developments to enhance their export proposition.
It is true that exporting outside a single market and customs union places some strain on a company’s financial health. The resulting longer effective transit times, higher inventory levels and increased freight costs all have a negative impact on working capital. A properly structured financial solution delivered by a well-informed and supportive finance provider with the assistance of well-conceived government schemes would go a long way to encouraging greater export ambition, particularly in the SME and MidCap segments. Financial services, government and industry need to work in partnership to fully exploit the export opportunities that undoubtedly exist.