10 August 2015 13:00
Service sector "key" to tackling trade deficit
The UK's service sector is outperforming the manufacturing industry at home but it has yet to take full advantage of overseas opportunities according to analysis by the British Chambers of Commerce.
The annual International Trade Survey from the BCC has found that the service sector offers "untapped potential" to turn around the trade deficit.
It is also warning that the UK is set to miss the Government's target of hitting £1 trillion worth of exports by 2020. Its findings suggest that if the UK continues at current growth rates, this target will not be reached until 2034.
However, while the overall UK trade deficit in 2014 stood at £34bn, the services sector saw its highest ever trade surplus at £86bn - equivalent to 5% of GDP.
The BCC poll of 2,500 businesses has found that only 23% of services firms currently export; a further 17% have either previously traded internationally or are looking to do so in the next two years.
By comparison, 53% of manufacturers surveyed currently export their goods, and an additional 13% have done so previously or plan to do so again.
Even so, the UK currently ranks as the second largest exporter of services in the world behind the United States.
John Longworth, BCC Director General, said:
"For some time we've been saying that we need a radical change in how we support export businesses. That we are set to miss the export target by 14 years tells us that the radical shift needed has not happened. We cannot continue doing the same things, yet dream of different results. For our part, the BCC will continue to grow our global network, providing practical support to UK businesses of all shapes and sizes around the world."
The results of the BCC survey show that the greatest barriers to exporting among services firms are differences in regulations and standards (27%) and language or cultural differences (26%).
"The Government must take these figures seriously and help exporters to catch up," said Longworth. "Our businesses have the potential to meet the target. They need ongoing support and access to finance to help them thrive on the world stage."