Rebalancing the Economy: Trade and Investment

Written Evidence from the Federation of Small Businesses

1. In responding to this consultation, the FSB would like to draw exclusively on its recently published report on exporting Made in the UK: Small businesses and an export led recovery, which we attach for your reference.

· Just under a quarter of FSB members export their goods or services overseas. 59 per cent export manufactured goods and 42 per cent services.

· 73 per cent of those not currently exporting claim they lack a suitable product or service to export while 17 per cent claim adequate business in the domestic market. Less than 10 per cent give other reasons.

· 48 per cent of exporters cite fluctuating exchange rates/foreign currency and 32 per cent red tape/bureaucracy as their most common challenges to exporting.

· The EEA (European Economic Area) is by far the most popular region to export to; this is a market for 87 per cent of exporters. This is followed by the USA (45%) and Canada (25%).

· Looking at future export markets, just over a third would consider the EEA, while 27 per cent cite the USA and 21 per cent would look to Canada.

· More than four in five members are aware of high street banks and Business Link as business support services; just under a third are aware of trade missions (32%).

– 45 per cent have used a high street bank and 44 per cent Business Link for business support services. Just six per cent have used UKTI (UK Trade and Investment) .

– 83 per cent of those who have used UKTI state it has been useful. 73 per cent say the same for Business Link and 55 per cent for high street banks.

· Better promotion of support available, tax breaks and tailor-made information for small firms are considered the best measures to encourage exporting among small businesses.

2. The report’s key recommendations were:

· More effective promotion of Government assistance in this area, particularly around the Passport to Export scheme which helps businesses exporting for the first time.

· UKTI should give more priority to the Gateway to Global Growth programme and improve the consistency shown by the OMIS (Overseas Market Introduction Service) to give businesses greater confidence in using the service.

· The Services Directive holds huge growth potential for small businesses. An information campaign about the benefits and availability of the web portals should be targeted at SMEs to help them realise the possibilities.

· The Letters of Credit Guarantee Scheme needs to be reviewed and removed if necessary, and instead a more thorough package considered.

· The Government, along with the private sector, should look at starting a trade credit scheme for small businesses.

3. Manufacturing

· More effective promotion of the support available to small manufacturers from UKTI, Enterprise Europe Network (EEN) and high street banks, making it straightforward to understand.

· UKTI should be more target driven for small manufacturers with subvention payments linked to business orders obtained.

· Banks should start to offer bespoke help for small businesses in a way that is offered to large businesses, including better promotion of the availability of finance.

4. Defence

· Establish an Industrial Participation clearing house within the Ministry of Defence (MoD) or UKTI to s hare offset commitments, with a percentage set aside for small businesses.

· The MoD and UKTI Defen c e and Security Organisation should work closely with small business organisati ons like the FSB to disseminate information relating to business oppor tunities in defence export to a wider range of businesses.

· There should be a more joined up approach between UKTI, the Foreign and Commonwealth Office (FCO), Department for International Development (DfID) and high street banks so that there i s more continuity in advice to businesses.

5. Tourism

· Increasing public funding for international tourism marketing with a targeted focus on the BRIC (Brazil, Russia, India & China) countries.

· Review Air Passenger Duty, VAT and visas to make the UK more competitive for international tourists.

January 2011