The business model that relies solely on the domestic market is “bankrupt” and more needs to be done to promote exports, according to a Government minister who visited Birmingham this week.
Trade and Investment Minister Lord Stephen Green said a joined up approach is urgently needed if the region’s businesses are to increase exports and trigger growth in Britain’s fragile economy.
Speaking at an event held at the ICC as part of the Government’s National Challenge: Exporting for Growth initiative, Lord Green said for too many years UK business had concentrated on the domestic market and was now lagging behind other countries, particularly when it came to exploiting opportunities in emerging markets.
“If there’s one thing we have learned from the financial and economic crisis we are coming out of it is that the model of growth that characterised this country in the early noughties is now bankrupt,” he said.
“We can’t have domestic growth fuelled by demand through debt – we now have to find a new more sustainable growth model.
“It is about finding a government strategy that does a better job of trade in international markets rather than the domestic market which was the primary engine of growth in the noughties.
“The British have a long history of a relatively frugal trade position. The last time we were in surplus was 1984. Since the sixties our trade position has been deteriorating.
“I think we are going to have to do something about our trade position and pay our way in the 21st century and that’s how we are going to have growth.”
While the Government could play its part Lord Green said that in itself would not be enough and it was up to the networks that support businesses to also take a key a role.
“Supporters of SMEs up and down the country need to support and encourage businesses into the export markets,” he said. “Chambers of commerce, banks, lawyers, anyone who has got influence – all have a part to play in a national challenge we need to rise to. I need people who can demonstrate we are up to this challenge and can meet it.”
With 41 per cent of exports currently going to eurozone countries the Minister also said it was time to look to new markets.
“Not only are we going to have to look overseas but further afield where we see the fast growing markets in Asia, the Middle East and Africa,” he said. “The forecast for the next 20 years is it is going to continue.”
He also highlighted the problem of playing catch-up with European competitors when it came to China and India.
“We represent just one per cent of exports to China, well behind the Germans but also behind the French and Italians. I don’t think that is an acceptable state of affairs to be behind our competitors in terms of market share.
“With India we have seen a decline from five to six per cent to two per cent. Well behind Germany and Italy but not France. The opportunities created by these kind of markets are tremendous.”
Although the Birmingham event was part of a national drive being spearheaded by Lord Green, he said Midland companies needed to be more engaged. “There aren’t enough exporters from this region,” he said. “There are around 7,000 companies exporting and that doesn’t seem enough to me.”
It was a sentiment echoed by Dough Mahoney from UKTI who added: “When it comes to goods exported there are around about 7,000 firms exporting already from the West Midlands, which given our small firms base we would like to see being higher.
“There are two things we need to do, to get firms who are not exporting doing so for the first time and getting companies that are already exporting expanding to more countries and increasing existing exports.”
But both agreed exporting for the first time could be a daunting prospect for many SMEs.
Lord Green said: “The first time you think about international markets, it’s a case of where do you start and how do you go about it, particularly for a smaller company.
“That is why UKTI, banks, chamber of commerce and all those other groups have an important part to play in helping.
“But the rewards are there in terms of profitability and growth.
“Over the last 12 months I have been to many countries and I have not been to a single place where British businesses are not welcome - they really want to see more of us.”
Mr Mahoney added that it might not be right for some companies, particularly those that are struggling and are “desperate to find a market somewhere” but urged firms to seek advice, either from UKTI or banks in the first instance.
Lord Green said time and effort would be required if export targets are to be reached.
“We have to stick at this for the next 10 or 20 years,” he said. “We need to be out there competing with aggressive competitors, not just from the Eurozone but also the US and new competitors like China and India.
“It is a marathon rather than a sprint and it isn’t going to come right overnight but we have the creative industry, competitive drive and excellence to succeed.”