Memorandum submitted by the East Midlands
Development Agency on behalf of all English Regional Development
Agencies
BACKGROUND
Exporting is key to the UK economy, representing
29% of GDP.[41]
UK's traditional export markets have been disproportionately affected
by the global economic downturn and the World Trade Organisation's
current projection[42]
is that the volume of world exports will shrink by approximately
9% in 2009.
However, a survey for BERR in December 2008 found
that exporters are also proving more resilient during the downturn,
with 22% exporting SMEs interviewed having increased staff numbers
since 2007-08, compared to only 12% overall; and 42% of the exporters
interviewed having increased their turnover in the previous 12 months,
compared to only 23% overall.
The RDAs recognise the critical importance of
international trade in helping fuel the economic recovery. Global
competitiveness through strong trade performance is a central
feature of all the Regional Economic Strategies, and trade has
arguably become even more important, with continuing opportunities
in growth markets given the current value of sterling.
RDAS AND
UKTI WORKING TOGETHER
UKTI's regional teams, which are co-located
with the RDAs, in effect act as the international trade arms of
the RDAs, using RDA funding to supplement UKTI's national funding
programmes in order to address regional priorities (eg for markets
and sectors). It should be noted that RDAs do not have trade representation
overseas. The role of RDA representatives based in overseas markets
is to promote inward investment.
A revised and enhanced "Dual Key"
framework,[43]
reflecting the recommendations of the 2007 Joint UKTI/RDA
Review of Regional Trade Services in England, has now been agreed
by RDAs and UKTI, providing an agreed framework for the delivery
of international trade services by UKTI's regional teams. Overall,
the changes give RDAs a greater role in business planning and
in the delivery of international trade services in the regions,
and ensure that regional priorities are more fully reflected.
It requires UKTI to secure agreement from RDAs on any trade strategy
developments and new national trade support programmes. For example,
RDAs were represented on the UKTI-led group that developed Gateway
to Global Growth, the new package of support announced by
the Prime Minister on 12 March to help experienced exporters
diversify into new overseas markets.
The changes agreed also align UKTI international
trade support activity with that of other business support services
at a regional level, including Business Link, and will provide
a simpler, more integrated, service to companies that wish to
go global. The links between UKTI's regional and overseas networks,
crucial to the quality and scope of the international trade support
offer to companies in the English regions, and with it the economic
impact, are maintained.
EXAMPLES OF
RDA-FUNDED INTERNATIONAL
TRADE ACTIVITIES
The nine RDAs provide additional funding to
support a wide range of international trade activities in the
English regions, delivered through UKTI's regional teams. Recent
examples include:
— One NorthEast have developed a trade
project with UKTI called Horizons, with £1 million
funding over the next two years to build international capacity/capability
and encourage growth in business turnover, through intensive assistance
for North East businesses preparing to launch new or existing
products into new overseas markets.
— Yorkshire Forward has launched a trade
campaign to promote international business to targeted SMEs within
key sectors. Their Going Global regional business conference
in September was attended by 600 regional businesses. They
have recently invested £6.6 million in the Trade and
Export Support Scheme, which is designed to help companies in
Yorkshire and Humber access funding to support the development
of their export strategies.
— As part of the Mayor's Economic Recovery
Plan, London Development Agency has made up to £0.3 million
available to UKTI London to support trade support activities.
These have included specialist seminars and workshops, a stand
at IFE09 (the world's only food event dedicated to innovation),
"Meet the Buyer" events (eg buyers were brought in for
London Fashion Week, the India Marketing Scholarship Scheme and
additional grant funding to help SMEs participate in overseas
shows and exhibitions.
HOW COULD
GOVERNMENT HELP
EXPORTERS?
Exporters obtain insurance cover from financial
intermediaries. For those generating exports in excess of £20 million
this is provided by the banks. Despite the re-structuring of their
financial products, evidence to date suggests that access to cover
is still forthcoming. However, for companies exporting sub £20 million,
cover is provided by the wider financial industry, such as credit
insurance agencies. These wider financial intermediaries are turning
away from the medium to high risk insurance export guarantee market.
We are therefore finding that smaller suppliers are unable to
take advantage of the depreciation of Sterling due to the lack
of export credit guarantee cover.
Essentially this is amounting to a gap in coverage
for projects below £20 million and remains a serious
barrier for businesses in the UK. Other EU states fund projects
of a smaller scale and the UK should be prepared to provide this
support. Banks are often unwilling to provide finance even against
UK confirmed letters of credit for projects. We believe that the
Government, through the Export Credit Guarantee Department, should
provide a guarantee of cover for projects sub £20 million.
The RDAs raised this issue in their Budget submission to the Treasury.
We welcome the Government's announcement that
they will be consulting on a new facility to provide support for
short-term trade finance and that they have under review other
support from ECGD to help exporters deal with the consequences
of the current instability in financial markets. We urge the Government
to put measures in place as quickly as possible to address these
issues.
27 April 2009
41 In 2008 UK exports totalled £413 billion-UKTI Back
42
WTO 25 March 2009 Back
43
Effective from 1 April 2009 Back
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