The UK’s trade deficit could be overcome by our service industry’s untapped potential
The British Chambers of Commerce (BCC) has warned the UK government that it is set to fall well short of its target of reaching £1 trillion in exports by 2020. According to the BCC, on its current trajectory the UK won’t achieve this target until at least 2034.
However, through its International Trades Survey the BCC has found that the UK’s services industry could be the answer to turning around that deficit. While the country’s manufacturing industry dwindles, the UK’s services sector saw its highest ever trade surplus in 2014, valued at £86 billion – equivalent to 5 per cent of GDP.
On top of this huge achievement, the BCC believes that the UK’s services industry has far more untapped potential. Its survey revealed that only 23 per cent of services firms in the country currently export, with a further 17 per cent having either previously traded internationally or looking to do so over the next two years.
Meanwhile 53 per cent of manufacturers currently export their goods, and an addition 13 per cent have done so or plan to do so again. The fact that the services sector is so dominant, despite the greater number of manufacturers exporting internationally, demonstrates the huge potential that the UK’s services sector currently has.
The BCC survey also found that, in order for UK services to grow further, the government must attempt to open up markets and encourage a wider variety of skills among the country’s workforce, so that UK businesses can be more competitive internationally.
John Longworth, director general of the BCC, commented: “The services sector is regularly overshadowed by manufacturers in the media and public imagination, despite the fact that we are one of the world’s leading exporters of financial and professional services. The low proportion of these firms actively exporting highlights the enormous untapped potential UK services firms hold.
“For some time we’ve been saying that we need a radical change in how we support export businesses. That we are set to miss the export target by 14 years tells us that the radical shift needed has not happened. We cannot continue doing the same things, yet dream of different results.
“For our part, the BCC will continue to grow our global network, providing practical support to UK businesses of all shapes and sizes around the world.
“The government must take these figures seriously and help exporters to catch up. Our businesses have the potential to meet the target. They need ongoing support and access to finance to help them thrive on the world stage.”
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