TheCityUK’s ‘Enhancing the ability of UK SMEs to export’ report, released today, suggests that helping small and medium-sized enterprises (SMEs) fulfil their export potential could boost economic output and help solve the UK’s productivity puzzle.
SMEs in the UK make up 99% of all businesses, yet the proportion that export is below the EU average: one-in-four against one-in-five, with medium-sized or mid-market companies lagging even further. Increasing this offers huge opportunity for the UK economy.
The report also identifies the substantial benefits to be gained by budding exporters from innovations in technology, market-based finance solutions and a greater awareness of government support schemes.
Chris Cummings, Chief Executive, TheCityUK, said,
Those exciting high growth medium-sized firms are the future of the UK economy. The evidence shows that firms which export are more productive than those that stick to their national market, so finding effective solutions to encourage these firms to sell into international markets should be a priority for government working with the private sector.
The UK is leading in innovative technology that helps SMEs raise debt and equity finance both from banks and non-traditional sources. While for the majority of smaller firms their relationship with their bank is the cornerstone of their business, they want to access a blend of financing options as they enter international markets.
Our proposals for government focus on the provision of better information and guidance. These are not expensive to deliver and are focused on the proposition that ‘governments should do only those things that only government can do’. As we have seen with the success of the Financial Services Trade and Investment Board (FSTIB), government working in partnership with the industry can better help meet the needs of firms of all sizes.
The Rt Hon Lord Maude of Horsham, Minister for Trade and Investment, said,
Sustainable and secure long-term economic growth is a priority for this government and the success of UK companies in international markets is central to securing this growth. But there are still a lot of British companies who set their sights too near our shores and could go further into exciting opportunities overseas. This is particularly true of SMEs. I welcome the proposals set out in this report on some of the ways government might address challenges faced by businesses and the opportunity to highlight the ways in which we are driving forward our export ambitions.
TheCityUK’s report outlines the following proposals:
- Private sector innovation, driven by UK-developed financial technology, will play an ever greater role in improving the market and government should address legal, regulatory and tax constraints for SMEs, investors and supporting institutions to encourage use of newer forms of finance;
- Create a well-constructed one-stop-shop gov.uk website that is properly accessible and user-friendly;
- Encourage and maintain collaboration between suitable private sector institutions and bodies such as UKTI and UK Export Finance;
- Fill in the gaps of the so called ‘funding escalator’, particularly for fast growing firms and actual and budding exporters;
- Help SMEs better navigate the changing landscape for trade-related products;
- Focus on potentially key funding markets – i.e. venture capital, mezzanine finance, private placements and SME securitisation;
- Promote better information collection, dissemination and rating of firms and scoring.
Mr Cummings concluded,
Better assistance for SMEs that aspire to be exporters or to become more sophisticated exporters is ultimately in their – and the UK’s – long term national interest, boosting productivity, creating jobs and delivering long-term economic growth.