Calling for an infrastructure to match the region’s ambitions

Jonathan Walker, the Chamber’s assistant director – policy, states a strong case for improving the region’s rail connectivity and urges North East businesses to get on board with a new campaign aiming to make it happen

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Jonathan Walker
jonathan.walker@neechamber.co.uk
@NEEChamberJW

Brexit has thrust the issue of international trade into the spotlight, with the idea of Britain being remoulded as an enterprising, globally trading nation a central plank of the Leave campaign.

The International Trade Secretary Liam Fox has pledged to grow the contribution of exports to national GDP from 30 per cent to 35 per cent.

The truth is that successive Governments have talked about their aspirations for the country to grow its exports, yet progress has been limited.

While exports have grown, this has often been on the back of rising global trade volumes rather than any overall increase in market share.

The Chamber has argued for many years that there is far more Government can do to help businesses exploit global opportunities, break into new markets and diversify their international customer base.

This cannot be the responsibility of one department or agency. Instead, achieving our national and regional export ambitions will require a ‘whole government’ approach. It must be central to any industrial strategy and any levers which can help global growth must be pulled.

Put simply, this is because there is no single reason why desired export growth has been so difficult to achieve.

For North East firms, opportunities exist across the globe. While the EU as a bloc continues to be our biggest export market, the USA is the region’s largest individual trading partner, with over £1.8bn worth of goods sent there in 2017.

Perhaps it isn’t surprising that the world’s largest economy provides such great opportunities, hence the debate around a potential trade deal with the US after Brexit. But trade deals themselves are no panacea. Speaking to individual firms I am often struck by the diversity of barriers they may face, many of which would fall well outside the scope of a free trade deal.

Taking the US as an example, the ‘America First’ approach of the Trump administration has, anecdotally at least, put strain on relationships between some of our exporters and customers who are more cautious about buying products from overseas.

Diplomacy therefore extends beyond simply discussing tariffs and must instead challenge the everyday barriers to international trade.

The UK should also make far greater use of its global diplomatic network to identify and stimulate market opportunities. This is something our competitors do very well, with the level of resources provided by the German Government for in-market support seen as a significant contributor to their export performance.

To date, there are more global leaders in the German small to medium (Mittelstand) business, then any other nation. Despite its relatively small population in global terms, Germany is the second largest global exporter, behind China, and ahead of the United States.

The post-war period allowed Germany to completely reinvent its economic environment, and has built a unified system between government, business and banks to support Mittelstand growth. This has enabled Germany to stick to a co-ordinated long-term strategy producing tailored skills and projects, resulting double the manufacturing GDP of the UK (20 per cent to 9 per cent).

For companies at the start of their export journey, or for those seeking to break into new markets, there is no substitute for the practical advice that can be provided to a business by somebody who has been there and done it.

Locally-based, experienced and informed trade advisers can be invaluable in helping firms understand the nuances and complexities of exporting.

Yet in an era when Government seeks to drive more and more services online, the value of this face to face, resource intensive support can be overlooked. If we’re serious about helping more companies to break into global markets, we must ensure the support is there to help them do so.

Likewise, visiting markets and potential clients is a key way to remove the “barriers of risk”. During a recent trade mission from the North East to Boston, 25 per cent of delegates did business on the mission, and 66 per cent said they had found new business partners.

Supporting business to explore global opportunities is one way Government can provide confidence to new and potential exporters while strengthening our overseas brand.

Government should also not lose sight of the need of businesses to be able to physically (and increasingly digitally) access their markets. Infrastructure has a huge role to play in supporting our export ambitions.

As a Chamber that is vocal on the need to improve our regional infrastructure we are constantly at pains to frame the debate in terms of enabling businesses to connect better with their customers, suppliers or workers.

Whether it is the global access afforded by an expanded Heathrow, improvements to the rail network allowing better inter-city travel or comprehensive digital connectivity for businesses in all parts of our region, public investment can be utilised to bring our businesses closer to their global markets.

It is crucial that we maintain access to the global skilled labour market. The North East is home to many cutting edge and dynamic industries with ever changing skill demands, so to keep their global and competitive advantage, we must be able to access required talent, and work with the region’s institutions to provide the skills needed for the future.

In particular, ensuring that tomorrow’s workforce sees not only entrepreneurialism as a future career path, but are also equipped with the right language and cultural skills to allow them to flourish in an international business environment.

If this has read like a bit of a shopping list, then that’s because it is. We fully support any aspiration to grow the UK’s international trade. Every week I meet businesses who are making and supplying innovative products and services across the globe while benefiting from the supportive business environment we enjoy here in the North East.

For our part, we remain committed to encouraging every business, regardless of size or sector, to consider exporting as part of their growth strategy.

But if we are to get anywhere close to the Government’s ambitions for exports, then a new policy approach will be needed. The list of priorities above wouldn’t be a bad place to start.

"The UK should also make far greater use of its global diplomatic network to identify and stimulate market opportunities. This is something our competitors do very well, with the level of resources provided by the German Government for in-market support seen as a significant contributor to their export performance."