Exports set to rise predict economists

A RECONFIGURATION of exports towards the emerging markets of Eastern Europe, the Far East and Latin America will help to boost the UK’s GDP growth over the next few years, economists have said.

Ernst & Young’s ITEM Club said UK firms were finally heeding advice about switching the focus of their exports to high growth economies in the so-called BRIC countries (Brazil, Russia, India and China).

West Midlands’ manufacturers and firms in the support services sector have been repeatedly advised in recent months to exploit opportunities that are now available in these countries.

Case studies by trade support agency UK Trade & Investment suggest some firms are following the advice, however, the recent State of the Region survey carried out by TheBusinessDesk.com in conjunction with DLA Piper suggested only 19% of firms in the West Midlands were actively looking abroad to strengthen their business.

Many of the firms said they prepared to rely on existing customers regionally and nationally.

This attitude underlines why the UK exports more to Ireland than it does to the BRIC countries combined.

This is a staggering statistic given the activities of such high profile businesses as Jaguar Land Rover.

In its latest predictions – The Outlook for UK Exports – the ITEM Club says the total value of UK goods and services exports will increase by 8.5% a year over the next 10 years, with the total value of UK goods and services into the BRIC countries increasing by 11.7% a year to 2020.

Exports to traditional markets in the United States and Europe are also set to rise, by 8.6% and 7.8% a year respectively the club has predicted.

The club has identified a decline in the value of Sterling helping to make UK goods more attractive and a rising middle class in the BRIC region demanding higher quality goods as reasons for growth.

Andrew Goodwin, the club’s senior economic advisor, said he believed these positive factors should mean that net exports contribute around 0.5% a year to GDP growth over the next five years.

He said: “The government has an important role to play in facilitating the re-orientation of exports towards emerging markets and breaking down the regulatory barriers for companies that wish to break into those countries by developing strong relationships with their governments.

“Government policy should also be focused on supporting competitiveness through improving skill levels and providing incentives to invest, which would help to close the productivity gap with Germany.”