Call for tax break to help SMEs look to exports

The calls come after official trade figures showed this week that the UK’s deficit on trade in goods and services was £3.6bn in February, the largest in six months. In a new report, business lobbying organisation the CBI says growing mid-sized companies with the potential to enter new markets must be at the forefront of any export-led recovery.

But it warns too many businesses are impeded by the perceived risks and costs of exploring new overseas markets, with only one fifth of the UK’s small and medium-sized enterprises (SMEs) exporting, compared with a quarter across the European Union.

John Cridland, CBI Director-General, said: “Global trade has been one of the bedrocks of UK economic strength but to cement our position as a leading exporting nation in the future we need more active Government support.

“While we are making progress in some fast-growing markets, weaker than expected economic growth in our major trading partners has held us back. We also have a heavy dependence on imports: ships are arriving in UK ports bringing in more goods than they take back.

“The growing middle classes of Asia and Latin America want to purchase leading UK branded goods and services, so there is every reason for the UK to be confident as long as businesses continue to make headway.”

To lift exports, business and the Government must build on those sectors where the UK excels, such as automotives and public services, as part of a wider industrial strategy, said Mr Cridland. As well as a new tax credit for SMEs, the CBI calls for a review of the practicalities of the Bribery Act and for export finance schemes to be made easier to access.

Mr Cridland said: “Breaking into new markets can be a huge leap for small and medium firms, which is why we’re calling on the Government to introduce a new tax credit to help them get a foothold internationally.”

He added: “Businesses tell us that they are being hamstrung by the sheer complexity and level of paperwork involved in complying with the Bribery Act. We accept without question that bribery is morally and legally wrong, but the Government needs to review the way the Act is affecting smaller firms on the ground.

“Export finance schemes will be fundamental to success, so the Government must rapidly deliver on their existing plans and make it easier for companies to participate.”

The CBI said that although the UK is making progress in the fast-growing economies of Asia and Latin America – specifically the BRICs – it still lags behind some of its international rivals.