A NEW exports strategy which focuses on boosting exports could give the UK economy a £20bn lift by 2020, the Confederation of British Industry (CBI) claims.
A new report from the CBI and Ernst & Young urges the government to set out a clear exports strategy that concentrates efforts on high-growth markets and breaks down domestic barriers, with the aim of increasing net exports from -2.4% in 2010 to 2.5% by 2016, with exports rising from 29% of GDP in 2010 to 36% by 2016.
Small and medium-sized companies (SMEs) have the most potential to grow, so the UK should aim to match the EU average of one in four SMEs exporting by 2020, compared with only one in five currently, the report claims.
“In recent years our performance has been lacklustre. Exports success will be one of the key drivers of growth, but for too long we have been over-dependent on advanced economies for our trade,” said John Cridland, CBI director-general.
“The continued crisis in the Eurozone underlines just how important it is for the UK to diversify its export efforts to high-growth countries. Given that we’re already playing catch-up with many of our competitors, we must act now or never to target high-growth economies, leapfrog the competition and deliver our growth potential,” he added.
The UK’s largest export market is currently the United States (17%), followed by countries in Western Europe, whereas the UK has had limited success in the BRIC countries (Brazil, Russia, India and China), with only 4% of our exports going there. The report calls for national exports to the BRICs to exceed 11% average growth in value terms by 2020. It also identifies the need to get ahead of the curve and focus now on the ‘next eleven’ countries: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam.
Among those areas identified as having high export growth potential in the next decade are: construction services, communication services, electrical goods, optical and high-tech goods, and financial services. If these sectors successfully tap into the demand from high-growth economies, then GDP could be boosted by 1.5%, or £20bn, by 2020. In addition, the UK’s world-class creative industries sector has huge potential for export growth.
“We need to capitalise on the booming success of the BRIC countries, and look beyond the curve to future high-growth markets, such as Indonesia, Mexico and Turkey. The new middle classes in emerging economies will have needs that our niche, high-end producers are more than able to fulfill,” Cridland said.
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