AS 2016: £79m post-Brexit export boost
The Autumn Statement included details of an additional £79.4m in funding over the lifetime of this Parliament for the Department for International Trade (DIT) to build capacity to support the UK’s exit from the EU and negotiations for the best possible global trading arrangements for the UK.
24 Nov 2016
DIT will use the money to develop and deliver an independent international trade policy.
Financial support for UK exporters will double through UK Export Finance (UKEF), the UK’s export credit agency. The Treasury said the new measures will see UKEF’s total risk appetite double to £5bn and the maximum cover limit for individual markets increase by up to 100%, potentially resulting in as much as £2.5bn of additional capacity to support exports to some destinations.
The number of pre-approved local currencies in which UKEF can offer support also increased from 10 to 40, enabling more overseas buyers of UK exports to buy British and pay in their own currency.
As the UK moves towards Brexit, additional resource will be allocated to strengthen trade policy capability in DIT, in cooperation with the Foreign and Commonwealth Office (FCO), totalling £26m a year by 2019 to 2020.
Dr Liam Fox, international trade secretary said: ‘Government is determined to get the best deals for households and UK businesses and this settlement ensures we’re able to support more UK exporters, attract more overseas buyers and strengthen our capability to develop and deliver an international trade policy for the UK.
‘The Autumn Statement also includes for UKEF measures to support an enhanced approach to risk management, including the use of private insurance markets, to manage risk concentrations. This could create additional appetite to support UK exports in popular markets, amplifying the benefits of the other capacity-increasing measures.’
Responses to this development have been mixed. Clive Lewis, ICAEW head of enterprise, said: ‘Government has set a high target and exports are key to UK economic growth. With Brexit negotiations beginning next year, companies need to have as many resources available to ensure that they can take advantage of the global opportunities presented. Although extra funding has been promised, it is disappointing that export vouchers which will help businesses in the initial set up process, were not included in the Chancellor’s speech.’
There was widespread agreement that more details are needed on how the UK will exit the EU.
Mike Cherry, national chairman at the Federation of Small Businesses, said: ‘The doubling of export finance is vital as we need to reach new markets in the wake of the Brexit decision.
But there will need to be stronger fiscal interventions to boost the economy next year, with the prospect of weaker longer-term growth looming. Small firms want to grow, export, innovate, recruit and be more productive, and they need to know as soon as possible the framework they will operate in.’
Karen Briggs, KPMG’s head of Brexit, UK, said: ‘There wasn’t much new detail in today’s Autumn Statement to help businesses prepare for Brexit although the scale of the economic challenge was made clearer by a reduction in OBR’s growth forecasts and a significant increase in national debt.
‘In terms of businesses planning for Brexit, it’s very much “as you were” which for most at this stage means analysing their exposure and identifying opportunities. Although we don’t know the details of what Brexit will look like, business must assess their strategy, decide what would be prudent to do now and where they can afford to wait and see.’