UK trade gap falls, but businesses not reaching export potential

Friday 14 June 2013

Manufacturing output rose in March

The UK trade deficit in goods and services reduced by £0.6 billion during April 2013, the Office for National Statistics has revealed.

Latest figures show the gap between imports and exports was down from £3.2 billion in March to £2.6 billion. A deficit of £8.2 billion in goods was partly offset by a surplus of £5.6 billion in services.

David Kern, chief economist at the British Chambers of Commerce (BCC), said it was "good news" that the deficit reduced in April.

However, he warned that the gap between imports and exports remains too large, and the UK is not yet making sufficient progress in closing it.

"It is concerning that the trade surplus in services, although large, fell in April, however the rebalancing of the economy towards exports must rely increasingly on services, and recent trends suggest that this can be done," Mr Kern stated.

"Furthermore, while the eurozone continues to struggle, it is good news that UK exports to non-European Union countries have risen, and British exporters must continue their efforts to diversify trade towards new markets."

He said more action is needed to "unleash the untapped potential" of many British exporters, so that businesses can drive a sustainable recovery.

To this end, Mr Kern called on the government to implement measures it has previously announced to support firms aiming to penetrate new markets.

"We need a national export strategy focusing on key areas such as trade finance, insurance and promotion," he added.

One potential problem for UK businesses trading overseas is the language barrier.

A recent study conducted by the BCC showed that more of its members are exporting goods overseas, but a lack of 'know-how' is dissuading many others from trying.

Some 62 per cent of non-exporters likely to consider trading internationally in the future see proficiency in foreign languages – or lack thereof – as a barrier to do so.

"Even when business owners claim some language knowledge, very few speak well enough to conduct deals in their buyers’ language," the BCC noted.

"This is doubly important when conducting business outside the largest cities and administrative centres."

The study revealed that French remains the most commonly spoken language, with 71 per cent of business owners claiming some knowledge.

However, just five per cent said they were able to converse fluently enough in French to conduct business deals in that language.

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Posted by Dan Smith