According to the latest government announcement, the UK intends to expand its international exports by £1 trillion per year by 2030. This 12-point approach is meant to provide organisations with the tools they need to seize new possibilities in global marketplaces.
The UK exported around £600 billion in goods and services last year, with just one out of every ten British enterprises trading internationally, but the Department for International Trade hopes to double that amount.
As said by BBC Global Trade correspondent Chris Morris, exporting to the EU is far more difficult under the UK's new free trade agreement than it was previously in a single market.
Meanwhile, the Office for Budget Responsibility's independent forecaster predicts that exports to the EU will be 15% lower in the long term.
Although the government does not address Brexit, Emily Rowland, policy advisor at the Institute of Directors, notes that “Businesses have been tackling head-on the challenges Brexit has thrown at them for the best part of five years.”
Along with the 12-point plan, the government has promised to increase its support for the recently formed Export Help Service, which offers a single point of contact and support for EU exporters.
So, why do we need to increase UK exports?
One of the government's macroeconomic current-account objectives is to encourage UK exports.
Currently, the UK's current account deficit is 3.5 per cent of GDP in 2020, up from 3.1 per cent in 2019.
Increased exports are crucial because they improve aggregate demand in the UK economy. Because of the multiplier effect, an increase in aggregate demand produced by an increase in exports has a positive influence on the level of national income.
A multiplier effect that improves aggregate demand and, as a result, short-run growth may result in increased inflation as price levels rise, which may harm individuals on fixed incomes, such as state pensioners.
At the same time, increasing the UK's foreign exports will help the government meet its goal of balancing the country's current account deficit.
Total imports of goods, excluding precious metals, increased by £1.0 billion (2.6%) in June 2021
Written by Naomi Adeoti
Research compiled by Jonas Theaker