UK Export finance funds to be doubled
In recognition of future Brexit negotiations and the need to begin shaping the future of UK manufacturers’ trading relationships now, Philip Hammond announced a “doubling of UK export finance” in the recent Autumn Statement.
These new measures consist of two component parts:
- the first is the increase in financial support provided by UK Export Finance (UKEF) from £2.5 billion to £5 billion and the increase of the number of pre-approved local currencies which the UKEF will support from 10 to 40. This means that buyers of goods from overseas can pay for exports made from the UK in their own currency, so long as it is one of those pre-approved currencies; and
- the second relates to the receipt by the Department for International Trade (DIT) of a further £79.4m to bolster independent trade policy and help to fund the trade negotiations required as we exit Europe. By 2019 to 2020, this investment will equate to £26 million per year.
These new funding lines have been put in place to maximise opportunities for UK export and are a positive step in giving the UK the best chance of both fostering stronger existing relationships and realising new export potential for UK manufacturers. The government does not want the only barrier to building those relationships to be the availability of export finance. The level of appetite of overseas buyers in brand new untested markets, however, remains to be seen.
Since 23 June 2016, whilst the fall in the sterling rate has been a boost for many manufacturers in relation to their UK export activity to offshore buyers, those importing goods and raw materials from overseas as part of their manufacturing operations have experienced far tougher times.
It is essential that UK manufacturers are proactive in exploring trading relationships with markets further afield ahead of the end of the two-year notice period, but ideally making inroads with those new markets ahead of the submission of the Article 50 notice by the end of March 2017.