A New Year. A new beginning. Time to look ahead to the future. A Brexit deal was finally done on Christmas Eve.
A negotiated settlement based on zero tariffs, which I suspect is the preferred outcome for the majority of businesses on both sides of the Channel. It is certainly my preferred outcome.
Some bumpy moments might lie ahead as businesses adjust to practical and procedural changes but the important thing is that a deal was done. It’s time for British businesses to look ahead to the future and seize the opportunities.
The wheels of industry: JCB chairman Lord Bamford says there has never been a better time for British companies to accelerate their efforts to grow exports – to Europe and further afield
Eight years have passed since we were promised an in/out referendum on EU membership. Much has changed since then. One thing that has not changed is what sets us apart as a trading nation.
We have always been an outward-looking nation and global trade has always been pivotal to our economic prosperity.
This New Year begins with news from the Centre for Economics and Business Research (CEBR) that the UK is once again the fifth-largest economy in the world, after the US, China, Japan and Germany.
An excellent foundation on which the UK can now build for the future, if businesses seize the available opportunities.
As an independent trading nation, there has never been a better time to accelerate efforts to grow our exports. Not just to EU countries under the terms of the deal, but also to markets further afield, such as Commonwealth nations.
According to a May 2020 report by the think-tank Civitas, the UK’s fastest growing export markets are now Nigeria, India (both Commonwealth countries), Thailand and Taiwan.
Let us be more like Germany with exports
Why is it then that so few British companies export? Only 9.6 per cent of businesses in Britain’s non-financial economy are actively engaged in exporting. An astonishingly low percentage.
Just imagine if it were to increase to 15 per cent, or even double to 20 per cent. Given that exports account for around one-third of GDP, if many more companies could get actively involved in exporting, the benefit to the British economy would be significant.
Does this low proportion of exporting businesses in Britain today explain why the UK’s balance of payments – the amount of money flowing into the country compared to the amount going out – has been consistently negative as a percentage of GDP since the early 1980s?
According to a May 2020 report by the think-tank Civitas, the UK’s fastest growing export markets are now Nigeria, India (both Commonwealth countries), Thailand and Taiwan
I am not an economist, but when you compare our trade deficit in 2019 of minus 2 per cent with Germany’s very healthy surplus of plus 6 per cent in 2019, you have to wonder what Germany is doing right and where the UK is going wrong.
In my view, we should look to Germany a lot more for lessons in operating an economy and running businesses. Two countries, with broadly similar populations, but with very different balance of payment figures. In simple terms, far more German products are sold overseas than imported into Germany, compared with the UK.
No less than 63 trade deals in just two years
Germany is the world’s third largest exporter – the UK is tenth. Let us be a lot more like the Germans when it comes to exporting. We really do need to be exporting a lot more.
My own company, JCB, recently marked 75 years in business. Since 1945, JCB has grown to become a global company selling to over 150 countries. This did not happen by accident – it is the result of a laser- sharp focus on exporting from the early days.
Our home market here in the UK was – and still is – very important. Trading with our closest neighbours – Ireland, France, Belgium, the Netherlands and Germany – is also vitally important to JCB, not least because of these markets’ proximity to our shores and to our factories here in the UK.
Proximity isn’t everything though. Take the United States, for example, the largest economy in the world. It’s also the single largest market in the world for the kind of equipment that JCB manufactures.
Last week, Liz Truss and her Turkish counterpart locked in tariff-free trading arrangements between the UK and Turkey
It may be further away from our shores, but it is a market that offers so many opportunities and it is easily accessible from British ports – in fact, hundreds of JCBs make their way across the Atlantic from Southampton every week. Even further afield, in India, in South East Asia, and as far away as Australia, there are many export possibilities for British companies.
We just need to seize more of the opportunities. I accept, of course, that many companies might need help and mentoring in order to make the leap into exporting. Chambers of Commerce and the Government export credit agency, UK Export Finance, are good places to start looking for advice and support.
The trading environment for exporters is improving all the time. Something that has been overlooked in recent weeks and months is the success of the International Trade Secretary, Liz Truss, in securing trade agreements with Canada, Singapore, Vietnam and Kenya.
Just a couple of weeks ago, the Department for International Trade signed a trade agreement with Mexico. The pace is relentless. No less than 63 trade agreements have been secured in just two years.
Last week, Liz Truss and her Turkish counterpart locked in tariff-free trading arrangements between the UK and Turkey, paving the way for a more ambitious trade agreement in the future.
This particular development will prove to be very important to the manufacturing sector. Such trade agreements open doors to British companies. They create the opportunities that the Prime Minister now wants us to seize. Doing so will grow the economy and create jobs. It’s also bound to help improve our balance of payments, once such an important barometer of economic performance.
‘I am enthusiastic about the opportunities that offshore wind can offer, particularly when deployed to make green hydrogen,’ says Lord Bamford
After several years of debate about our future relationship with the EU, it’s time for British companies to look to the future and raise their game by exporting more, making Britain a true global leader in free trade.
Now that the deal is done and the transition period has ended, Ministers will hopefully have more time to focus on other priorities.
Dealing with Covid-19 is obviously top of the list, but the list is long. Delivering the national infrastructure strategy is crucial for businesses, upgrading the road and rail networks, improving connections between cities and regions and so on. Dealing with the scourge of potholes on our local roads network is also a priority for motorists.
Another priority high on the list is the Prime Minister’s ten-point plan for a green industrial revolution. Boris Johnson is right to accelerate our path to net zero.
As a businessman, I am enthusiastic about the opportunities that offshore wind can offer, particularly when deployed to make green hydrogen.
Fossil fuels are the enemy in the battle against climate change. I believe hydrogen has a very significant role to play as a zero carbon fuel of the future, particularly for public transport, industry and businesses.
Protecting our natural environment is another important part of the PM’s plan, which is in everyone’s interest as citizens of our planet Earth.
Let’s hope that Ministers can now dedicate a lot more time and effort into delivering on the remaining priorities of British businesses and the British people, including the promised ‘levelling up’ agenda.
Lord Bamford is Chairman of JCB and a Conservative peer.
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