News

April 26, 2013

Rise in UK exports to emerging markets

Asia has overtaken the European Union as the market in which exporters expect to see the most growth over the next five years, according to research by the Institute of Directors (IoD) and the All Party Parliamentary Group on Trade and Investment based on a poll of over 1,000 IoD members.

The report reveals that Asia has moved ahead of North America as a destination for UK exports. Now, for the first time, IoD members are more likely to trade in emerging Asian markets than with the mature markets of North America (47% to 46%).

The key findings show:

EU is still the top destination for exports: The European Union remains the market in which most IoD members are active. However, the percentage of IoD members trading in the EU is falling (from 84% to 82% between 2010 and 2012), whereas the percentage in Asia is on the rise (from 39% to 47%). In particular, there has been strong growth in the Middle East (38% in 2010 to 44% in 2012).

Businesses expect faster growth elsewhere: Asked which markets they expected to deliver export growth over the next five years, Asia came out top, with 50% of IoD exporters optimistic about their prospects there. Only 43% anticipate their export activity will grow in the EU over the next five years, a fall from 58% in 2010.

Exporting remains difficult for small businesses: 57% of IoD members export, higher than the national figure of 31%, suggesting that there is scope for more UK companies to begin exporting. Half of respondents reported that they gain less than a third of their turnover from exports, showing significant potential for expansion by existing exporters.

Concerns about risks associated with exporting are a barrier for small firms. 35% of businesses said their organisation was too small to export and 72% of companies that had never exported said they had no plans to do so.

Alexander Ehmann, head of enterprise policy at the IoD and author of the report, said: "Expansion into new markets is critical if the UK is to address its truly alarming trade deficit. Policy-making should focus first on encouraging those firms for which export activity is only a small part of their business to expand to greater levels."

Margot James MP, chair of the APPG on trade and investment, said: "It is our job to help remove the barriers facing exporters whilst also working to encourage more of our world-class British businesses to take their products and services abroad."