Britain is experiencing an extraordinary expansion in its global export trade and a string of new successes in high growth markets beyond the EU. And it’s a boom being led by some of the UK’s smallest companies.
You might even call it a Brexit Boom, for the growth in exports has been showing up in numbers from the Office for National Statistics over the last few years.
Indeed, the latest ONS report says that UK firms sold more overseas in the 2018/19 financial year than at any time since records began. In September 2019, UK exports rose to £634bn, up 2.7% from the previous year, of which goods made up more than £350bn and services £283bn. Since 2016 exports increased by more than £111m – a total rise of 22% between 2016 and 2019.
Since 2003 my data company – Gibson Index – has been tracking around 70,000 of the UK’s smallest companies and I’ve been spotting a significant shift towards exporting to the three big markets outside of the EU for some time.
Long ignored by the mainstream media and BBC, what I’ve witnessed is the most astonishing way that while most of the UK’s SMEs are little known at home, they enjoy a celebrity, even cult status abroad.
There is Dolomite Microfluidics, a biotech firm whose first office was the cells of the abandoned Royston police station in Hertfordshire, which has won several US quality awards for its innovations.
One Scottish software firm, now absorbed into a larger firm, pinpointed the identity of the Washington Sniper who was terrorising the US capital back in 2002. A Welsh engineering firm Cintec saved Egypt’s oldest pyramid from imminent collapse.
Interestingly, the roll call of top SMEs shows that London is losing its dominance in the economy relative to a new, rapid rise of the regions. The city of Liverpool is now home to emerging sectors in tourism, advanced software, and the ambitious “HyNet” network, the national hub for hydrogen technologies.
In cyber security, Darktrace Ltd is the new global leader while Tristel plc makes the world’s most effective medical wipes. In Cheshire, Wejo Ltd has emerged from nowhere a few years ago and looks set to become the “Facebook of automobile data” – from the world’s one billion cars.
I’ve put together some of my findings in a new report, commissioned by the Civitas think-tank, and there is no doubt that this Brexit Boom is not only real but accelerating in breadth and depth. From 2016 onwards we have been inundated with good news stories from SMEs signing new export contracts – most often outside the EU – and rarely reported by the mainstream press.
This new report is the first evidence that demolishes the doom-laden predictions of the influential Remainer establishment, who forecast with certainty the UK would soon lapse in isolation and penury.
Here are some of the facts in the report: In 2018, exports leapt 27% to countries such as Nigeria, 24% to India, 19% to Thailand and 18% to Taiwan. Exports have doubled in countries such as Oman.
To distant Kazakhstan, UK exports climbed to $2bn, only slightly less than the UK’s exports to Austria, worth $2.43bn in 2017. Bilateral trade with Israel has risen 72%. Little Macedonia, Europe’s newest country, now buys almost more from the UK than does the whole of Austria.
In addition to the rapid rise in export volumes, the report found that thousands of the UK’s smaller companies are turning their backs on the heavily protected markets within the EU and finding lucrative, far more welcoming markets in the three big high growth regions of the world – North America, Middle East and south Asia.
Suddenly, thousands of UK exporters have been re-discovering prosperity outside the EU – not least because the UK’s trade links with many nations have existed for 300 years and more.
The report calls the rapid, indeed strategic realignment of the UK economy away from the EU to the world beyond, the “Big Switch”. In future decades we forecast that while UK-EU trade will stay the same, the UK-non-EU trade volumes could double in as little as six years to 2026 at current rates.
There has never been a real level playing field with the EU, or indeed an open single market. While the German engineering giant Siemens does £4bn of business in the UK, it is almost impossible for any UK firm to gain even a £20m contract in power engineering in Europe.
This pattern is repeated across many other sectors. I once heard a French executive boasting that whenever they blocked a UK contract application they called in “Dunkirking”.
It is near impossible to start a business in Greece without a ‘Greek owner”. Britons who tried to start a language school or a diving school there found the police on their doorstep, closing them down. They discovered the so-called Single Market was in fact closed and fiercely protected.
Another significant finding of the report is the historic under-reporting of the true scale of the UK services exports by the ONS. The ONS itself admits that services exports are impossible to track with any accuracy.
However, says James Wells, a former head of export stats at the ONS, who is quoted in the report, says: “If we could make a proper tally – vital given that services make up 80% of the UK economy – it is likely the UK would be rated as the world’s fifth largest exporter and not the 10th, its usual position in international statistics.”
We also make solid recommendations in the report to help that accelerate the UK export boom in future. A scheme, named “Five to Fifty”, would concentrate state support behind those SMEs already exporting to a handful of nations to enable them to export to many more.
Secondly, it calls for a national programme to train 30,000 professional export managers.
Since the report was first compiled the global economy has been struck hard by the new coronavirus, paralysing sectors such as travel, events, hospitality and transport. However, the report predicts that the core underlying factors for the boom: a liking for UK goods, a continuing rise in middle class affluence outside Europe and new buccaneering attitude by UK companies, remain unchanged.
Demographics is also a key long-term factor. Since the UK joined the EU in 1974 some non-EU countries, for example Saudi Arabia and Indonesia, have tripled or quadrupled their populations, creating much larger middle classes who love to buy many British-made products – from our cars, to china pottery, language services, books, cosmetics, textiles, to our whisky and salmon.
Indeed, if manufacturing is returned from China to UK-based companies in the wake of the virus, it will supply an additional, multi-billion pound boost to the UK regions. The report concludes that due to the astonishing, if little-known achievements of the directors of the UK’s exporter SMEs, the Brexit Boom is rapidly creating for the UK a whole new “Empire of Trade”.
In 2040 our children might ask: “Daddy, why didn’t we leave the EU 20 years earlier?” The report concludes that by 2040 our children will know, with certainty, that leaving the EU was the best thing the UK could have done.
The author runs the Gibson Index.
The report can be found here: http://civitas.org.uk/content/files/2443-A-Britains-Export-Boom-ppi-54-WEB.pdf