Report says government ‘shortsightedness’ over Brexit could lead to long-term export slump for UK business

PUBLISHED: 10:56 15 July 2020

A report has suggested UK businesses could be hit with a long-term export slump after Brexit; Aaron Chown/PA Wire

A report has suggested UK businesses could be hit with a long-term export slump after Brexit; Aaron Chown/PA Wire

A report has found that government ‘shortsightedness’ over Brexit could lead to a long-term export slump for UK businesses.

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The findings, made by the National Audit Office - which audits parliament spending, shows government departments lack a long-term plan for Britain’s export market after Brexit.

MPs who have read the study said the Department for International Trade (DIT) was more concerned about securing ‘short-term gains’ and needed to make sure it supported small firms as well as big ones.

Head of the Commons Public Accounts Committee (PAC), Meg Hillier, a Labour MP, described the DIT as being “too geared towards banking ‘quick wins’ at the expense of demonstrating steady progress towards the government’s long-term goals.”

She added: “[The] DIT wants to focus even more of its resources on supporting larger companies - it must make sure it doesn’t leave smaller, innovative businesses behind.

“Now, more than ever, these small businesses need support to help get the economy going again.”

The NAO study also questioned the value of the government’s 2018 stated aim to increase exports from 30% to 35% of GDP.

The organisation stated: “The lack of a timeframe for the ambition and the existence of other factors that can affect export growth, some of which are outside of government’s control, make it difficult to hold DIT accountable for its progress.”

It praised the department’s attempts to improve data quality on British exports but said more could be done.

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“[The NAO} needs good data to identify which of the 5.9 million UK businesses already export or have the potential to do so.

“To make the best use of its resources, DIT plans to target its bespoke support at larger businesses and to direct smaller businesses to its digital services. However, a recent DIT survey of its clients suggests that some services on its website are not meeting the needs of some UK businesses.”

The report then urges the DIT to work more closely with the credit agency, UK Export Finance (UKEF), to keep up momentum.

Comptroller and Auditor General (C&AG), Gareth Davies, the head of the NAO, said: “DIT has made a good start in developing a strategy and the arrangements it needs to support export growth, and UKEF has expanded its offer of export finance to support UK businesses.

“To increase exports and boost UK productivity and growth, DIT and UKEF must work closely together and across government to ensure efforts and resources are focused in the regions and sectors where there are the greatest opportunities to support UK businesses.”

UKEF supported exports to 72 countries in 2018-19 with 80% of the value of these exports concentrated in five countries.

The report mentioned that UKEF “relies on DIT staff” to help identify potential customers and suggests increasing UKEF overseas staff while training DIT staff on financial matters to avoid a shortfall in expert knowledge of financial markets.

A DIT spokesman said: “We will continue to support UK businesses across a range of sectors to export to all parts of the world, by focusing on securing longer-term opportunities as well as working hard to boost trade and investment in the short-term.

“We will do whatever it takes to ensure businesses can access the right tools, finance and in-market expertise to succeed on the global stage.”

In 2019, the UK exported £701 billion of goods and services abroad.

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