Guarantee wanted to encourage exports

Jan 14 2010 by Iain Laing, The Journal

BUSINESS leaders have called for an expansion of the export guarantee scheme to speed the growth in UK sales overseas.

UK exports in November jumped to £20.2bn, the highest in 13 months, driven by sales of consumer goods and chemicals, according to the Office for National Statistics.

The trade gap with the European Union widened to £3.75bn, the largest since January 2008. This was partly due to higher car imports from the EU as a result of the UK government’s car scrappage scheme.

And the UK’s trade deficit stood at £6.8bn for November – slightly better than expected, but still only representing a 0.1% month-on-month increase in goods sold overseas.

Jonathan Walker, policy adviser for international trade at the North East Chamber of Commerce, said the Government was still not doing enough to give exporters the confidence to get back into world markets. He called for a fully state-backed guarantee scheme to run for as long as was needed.

“A lot of the progress that was made in the last two years (in the region) has been wiped out. We are back to where we were,” he said. The North East – historically one of the smallest export regions – had ratcheted up its performance, becoming the fastest growing in the UK in 2008. The NECC launched the Go Global campaign to encourage North East companies to focus on increasing overseas sales.

Mr Walker said that companies which continued to look overseas last year for growth had fared better, mostly because they were selling into more diverse markets than their competitors in countries that had seen swifter recovery.

He said: “We hear from a lot of local exporters that they have been shielded from the worst of the recession – particularly those with a diverse range of customers. They are also well placed to capitalise on the growth that’s already started to emerge in countries including China, Brazil and India.”

He said the export guarantee scheme – which rescued a £9m deal for Boulby firm Cleveland Potash when it faced losing a Brazilian contract last year due to withdrawal of trade insurance – should be there “to help businesses that would not get into exporting, not just those in trouble”.

Economists had expected the trade deficit to shrink in November. Philip Shaw, an analyst at Investec, said: “A narrowing trade balance is consistent with a rebalancing of the external and internal sectors of the economy and it’s certainly a trend we hope is maintained over the next couple of years.”