The Fourth of July seemed an appropriate time to think about the UK’s trade relationship with the US – as well as to wish all my American friends and colleagues a happy Independence Day.
The US is a market of over 300 million people – five times the size of the UK – and the world’s biggest economy. It is also the UK’s largest single trading partner.
It accounts for approximately 17% of all UK exports, or £88bn worth of trade in 2014. We are actually a net exporter to the US, selling them £36bn more goods and services than they sell us.
Looking at this picture, no one would be surprised that for many UK companies looking to sell overseas, trade with the US seems a natural choice. And the demand matches their ambition.
UKTI has identified a number of focus sectors in the US as huge opportunities for UK exporters, with the potential to deliver nearly £3 billion in export value to the UK economy. These are all areas in which the UK has proven expertise and capability, and in which there is a sizeable demand for high quality goods and services in the target markets.
UK exporters could find a market in sectors such as aerospace, technology, food and drink, automotive, energy – the list goes on. These opportunities certainly exist for large UK exporters, but they are also there for smaller companies.
We shouldn’t just think about sales of finished products, but of products in the supply chain. For example, Techflow, based in Northumberland, which supplies piping and hoses for the oil and gas sector, has sold its products into the US – with some help from the government through UK Export Finance (UKEF).
Like the UK, the US also has a highly developed creative economy. With our strength in technology and the creative industries, we need to export more of our intellectual property – and the US market could be worth hundreds of millions to UK businesses.
The Exporting is GREAT website lists hundreds of buyers in North America looking for UK goods and services right now. With excellent logistics for companies trading across the Atlantic, as well as cultural, historic and linguistic ties to make doing business even easier, North America is filled with opportunity for UK exporters.
This is where UK Export Finance, the UK’s export credit agency, comes in. We have a mission to ensure that no viable UK export fails for lack of finance or insurance from the private sector. We help companies win export contracts by providing attractive financing terms for their overseas buyers; we help them fulfil orders by supporting their working capital; and we help make sure they get paid with export insurance.
And an attractive offer of support from UKEF can also play a part in attracting inward investment to the UK. By investing in the UK and beginning to export from here, companies from overseas are able to access UKEF’s support – and at the same time create jobs and stimulate the UK economy.
One recent example is GE, with whom UKEF signed a co-operation agreement last year. Under the agreement, GE committed to ongoing support for its UK supply chain, and the export finance provision outlined by UKEF could support up to 1,000 new GE jobs in the UK. And we provide export finance and insurance to many others with US parents, including other big names like Fluor and Caterpillar.
It’s true that, when thinking of the sorts of markets where export credit agencies are normally active, highly developed economies like the US do not immediately spring to mind. But with the pace of development of new industries and technologies, there will always be a need for supplemental forms of finance where the private market cannot take on the full risk of a project. For example, in the US’s fast-growing liquid natural gas sector, Korea’s export credit agencies, the Korean Export-Import Bank and K-Sure, last year financed Cheniere Energy Partners’ facility in Louisiana.
UK Export Finance has at least £1 billion in market risk appetite for the US, and we’re keen to support more buyers of UK goods there. And we can also help UK exporters access these major projects, whether through the Exporting is GREAT campaign, UKTI’s network, and our own international business development team.
Another area in which we’re increasingly able to support exporters is helping them secure the working capital to fulfil export orders. Since this trade finance product range was introduced in 2011, we have helped banks provide millions of pounds in cash flow support to UK exporters selling to the US. This includes companies like Vee Bee Filtration, LSN Diffusion, Techflow, Metreel and Winbro.
With so much on offer for UK companies, why not join these companies in realising the world of opportunities presented by trade with the US?