When you talk to businesses, it is widely acknowledged that trade is good for growth and creates jobs. Unfortunately, despite the UK’s illustrious history as a trading nation, the past few decades have seen us lagging behind other major economies. More can and should be done to bang the drum for British business overseas.
The challenge is working out how we add value in the global economy. We may not be able to compete with low-cost manufacturing in parts of Asia, but we still lead the way in a number of sectors and could play a key role in the global supply chain, if we were to trade more, with more countries.
The balance of economic power in the world is shifting towards emerging markets in Asia, Africa and elsewhere. Interestingly, in 1853, the year Standard Chartered was founded, China and India together accounted for 40 per cent of global GDP. Today, their combined share is just 17 per cent, but by 2030 it is set to increase significantly, to 31 per cent. It is vital that the UK’s exports reflect this changing economic picture.
There are about 1.1 million companies in the UK, but fewer than one-fifth of them export. We have lost competitiveness as a trader, with our share of global exports approximately halving in the last 35 years.
While some progress has been made, for example in trade with China, our companies are still struggling to export to far-flung markets despite the enormous opportunities on offer. Fewer than 20 per cent of our medium-sized businesses export outside the EU and it is humbling to note that Britain’s exports to China were worth USD10.1 billion last year, compared with Germany’s USD73.4 billion.
The trading data tells us that we have a lot to do. We need a new approach to trade, which looks to consolidate our established markets, such as Europe and the US, while building fresh opportunities in new ones, particularly countries in Asia and Africa.
This will require action by both the government and the private sector, whether it is language training, trade delegations or measures to stimulate trade finance. We need to showcase established sectors such as pharmaceuticals and financial services, as well as promoting newer ones such as technology. It won’t be fixed overnight, but will require the British hallmarks of tenacity and innovation over time. Together we can show that the UK is good for trade and trade is good for the UK.
Sir John Peace is Chairman of Standard Chartered PLC. He joined the Board of Standard Chartered PLC in 2007 as Deputy Chairman and was appointed Chairman in 2009. Sir John is also Chairman of Burberry Group plc.