Supporting UK businesses to ‘go global’ will help UK Government realise Industrial Strategy ambitions

Trade hasn’t been far away from the news over the last six months. That has largely been down to the theatre of new tariffs being revealed or geopolitical issues that have impacted the movement of goods around the world.

While these events rightly grab headlines in the moment, it is also important to remember why trade matters in the first place.

There are many reasons but I will focus on two.

Firstly, we are an island trading nation. For generations, we have been pioneers of global trade and proud to sell our wares internationally.

In recent times, our economy has been built around exportable services, with sectors like technology, life sciences and financial and professional services tipped to drive most growth.

The Government’s recently-published Modern Industrial Strategy backs these sectors, among others, to turbo-charge productivity and deliver G7-leading growth.

We know these industries rely more than most on access to the world to thrive. The UK is the second-largest exporter of services globally and when researchers at WPI Economics looked at projections for 10 key service industries, they found they are set to grow two percentage points faster than the rest of the economy over the next decade. That is worth £10.66bn.

So, any measure that captures the trade intentions of businesses across the economy can be considered one of the most vital economic indicators for our country.

This week, MAG and the Growing Together Alliance of business groups released the latest findings from our UK Trade Barometer. Through YouGov, it asks 2,000 firms how they have traded globally in the last three months and what their expectations are for the quarter ahead.

The positive news is exporters held up well in Q2. More than half – 54% - said they increased exports to an existing market between March-June. That was down slightly on 63% in Q1, mirroring the cautiously-welcomed GDP figures from a week earlier. They told a story of growth – just slower growth than before.

What also jumped out was that services did perform better than goods exporters. Looking at manufacturers, 44% grew sales in Q2 and exports to America in particular fell backwards amid uncertainty over tariffs. By contrast, IT and Telecoms – as an example of a service sector – had a stronger period, with 77% growing sales.

For our economy to thrive, we need to play to our strengths and so it is welcome news that the Industrial Strategy backs the highest-potential sectors.

Delivering that Strategy must also involve supporting the key enablers of growth and it has been pleasing to see the Chancellor back aviation as one of those. But we also need a plan that will deliver growth now - and in the years immediately ahead of us - not just in 20 or so years’ time.

With airports in the North, Midlands and South, MAG will spend £2.5bn on its own infrastructure over the next five years. We are committed to working with Government on how that private investment works alongside policy interventions to boost productivity in all parts of the UK.

That leads me to my second reason trade matters. We know this Government rightly wants to build an economy in which all regions flourish, not just a few.

There is clear evidence – including from the Centre for Cities – that towns and cities with more exporting businesses perform better economically. That explains why they tend to have higher living standards.

Another stark finding from the latest Trade Barometer release is the difference between exporters based in London and those elsewhere.

More than half of London businesses – 51% - expect to increase exports in the next quarter. That compares to 22% in both the North and the Midlands. A third of firms in the capital – 37% - anticipate breaking into a new market in Q3 vs 14% in the Midlands and 16% in the North.

The good news all the key sectors identified in the Industrial Strategy are abundant across the UK. Just look at the Ox-Cam arc and clusters of AI, cyber, life sciences and materials manufacturing in the North West.

This highlights a clear opportunity for Government to boost productivity nationwide – and close the gap between London and the regions - by working with business and local leaders to identify the interventions that will help more companies “go global.”

There are positive noises, with speculation a high-speed Northern Powerhouse Rail network – via Manchester Airport - will finally get the go ahead later this year as just one example.

Delivering G7-leading growth is a long-term objective but the next few months will tell us how likely we are to make big strides towards achieving it in the near future.