business

British Businesses Backed By £7.4bn Government Support To Export Around The World

Image by Pete Linforth from Pixabay

UKEF launches a new mission statement, putting sustainability at the heart of its agenda, backed by ambitious new emission reduction targets
British businesses have been helped to export to 61 countries around the world over the past year with £7.4 billion of government support – providing a significant boost to jobs and the UK economy.

The finance provided by UK Export Finance (UKEF) in 2021-22 supported 72,000 UK jobs and added a gross value of £4.3bn to the economy, meaning more money in people’s pockets and continued job security for British workers.

Businesses to benefit include a Teesside-based business, Paralloy which secured a £15m funding package to enable the business to fulfil the most exports in its 90-year history, with shipments to North America, the Middle East and Asia-Pacific.

On its support from UKEF, Robert McGowan, CEO of Paralloy, commented: “This UKEF-backed funding package from Santander UK has enabled us to future-proof the business, and provided the working capital to fulfil bigger export contracts. It’s truly been a game-changer, and we can now focus on building out our order book even more and hiring the right team to support that.”

Of those supported by UKEF, 83% were located outside of London and a record 81% were small and medium-sized enterprises, according to the organisation’s annual results published today.

The £7.4bn – the highest level for 14 years - brings the total support over the last five years to £33.4bn.

William Bain, Head of Trade Policy at the BCC, said:

“By far the biggest economic gains for export growth come from lifting non-tariff barriers to trade in goods and services.

“Whether its access to export markets for UK professional and business services or product markets for goods exporters, we need to remove out-dated rules.  

“We welcome the ambition in the Secretary of State’s speech today, it would be great to see this ambition now being progressed in the Government’s trade deals. We need the lifting of non-trade barriers to be as wide as it can possibly be.”

It helped businesses to recover following the pandemic & is now supporting exporters facing challenges with global supply chains worsened by the Russian invasion of Ukraine.

And in its first year without providing any support for overseas fossil fuel projects, UKEF has launched a new mission statement and made ambitious carbon reduction targets to address climate change.

Benefiting small businesses

UKEF has stepped up its support for small and medium-sized enterprises (SMEs). The number of SMEs that benefited from a UKEF support scheme increased by 25% compared to the previous year, with over 560 insurance and guarantee schemes issued.

In a new annual record, 81% of the companies UKEF supported directly with a scheme were SMEs. These milestones were underpinned by the ‘game-changing’ General Export Facility – a product designed specifically to give SME exporters more flexibility in accessing trade finance, unlocking almost £250m of working capital loans.

A further £300m was also awarded to 263 UK companies supplying to infrastructure projects UKEF has financed across the globe, supporting UK exports. These include doors made in Birmingham sold to an airport in Ghana, fridges made in Norfolk sold to a hotel in Dubai and critical medical supplies shipped from South Wales to hospitals in Zambia.

Anne-Marie Trevelyan, Secretary of State for International Trade, commented: “The UK is awash with untapped export potential. We have opened the door to the world with historic trade deals and now we are helping businesses walk through it. That’s why our national export credit agency, UK Export Finance, is boosting firms’ ability to export to the world with record-breaking support year after year.”

Moreover, UKEF provided £27mto support importers buying from UK SMEs using its Standard Buyer Loans Guarantee Scheme, ensuring UK companies get paid upfront while overseas buyers benefit from more flexible repayment terms.

New emissions targets

As the need to address climate change becomes increasingly urgent, UKEF has launched a new mission statement, putting sustainability at the centre of its purpose.

In its report, UKEF set new targets to reduce absolute emissions (tCO2e) of oil and gas sector exposure by 75% by 2030 and reduce economic emissions intensity (tCO2e/£AAR) of power sector exposure by 58% by 2030 as it seeks to operate on a net-zero basis by 2050.

Further to its mission statement, UKEF was also recently recognised as the top export credit agency for sustainable financing in 2021, according to an independent ranking of ECA-backed deals.

It comes as UKEF maintained sizeable levels of financial support in its first year without backing overseas fossil fuel projects: it supported the clean energy, healthcare and critical infrastructure sectors with over £3.6bn.

Mike Freer, Minister for Exports, added: “It was a pioneering and crucial step for UKEF to end its support for fossil fuel projects over a year ago. Now, with the new targets and mission statement we are launching today, UKEF is going even further to be a driving force behind the UK’s role in supporting the global energy transition. This can only be made possible with the skills and expertise of businesses across the UK, and UKEF is primed to offer its support as they seize these opportunities.”

Protecting the UK taxpayer

As a self-funding department, UKEF takes on risk to make exports happen and works within an agreed framework set by the Treasury to ensure it makes measured decisions.

Since the start of the pandemic, UKEF enhanced its suite of products to meet the changing needs of UK businesses and stimulate exports – providing £8.2 billion of support through its Temporary COVID-19 Risk Framework since its inception.

Throughout this time, the department continued to operate efficiently and manage financial risk to protect the interests of the UK taxpayer in 2021-22, generating a net profit of £324m for the Treasury.

Carl Stephen Patrick Hunter OBE, Chairman of the British Exporters Association, said: “UK Export Finance (UKEF) has provided vital support to exporters during the pandemic and is setting the pace amongst the ECAs in the global transition to sustainable trade. We at BExA look forward to working with UKEF over the coming year to continue to refine and develop its products to simplify and accelerate export journeys for UK SMEs.”

This follows an announcement by the UK government today that it is set to unlock around 100 trade barriers worth more than £20bn to help more businesses export.