Liam Fox is right about British exporters – we’re just not good enough at trading
He may have expressed it rudely, but the evidence suggests that the Trade Secretary was right to criticise Britain’s business leaders
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Your support makes all the difference.“Almost wholly accurate” is how I would describe the recent criticism of British exporters made by Liam Fox, Trade Secretary and Brexiteer.
Instead of engaging in the hysterical abuse that his remarks provoked, let us test his statements one by one, if readers will forgive a rather heavy reliance on statistics.
Fox started by saying that “this country is not the free-trading nation that it once was. We have become too lazy and too fat on our successes in previous generations.” While I can find no statistics for the supposed laziness of company executives, I note that, over the last decade, UK exports of goods have grown by an average of only 2.8 per cent per annum – well behind Germany (+8.1 per cent) and France (+5.3 per cent). And by the way, the most recent figures for British exports are not good. Between the three months to April 2016 and the three months to July 2016, exports decreased by £1.6bn (2.2 per cent) and imports increased by £3.3bn (3.2 per cent).
At the same time, the chief executives of our leading companies have been awarding themselves handsome pay rises. Last month the respected High Pay Centre showed that rewards at the top continue to grow at a double-digit rate. The average pay package for chief executive of big companies was £5.48m in 2015, up from £4.96m in 2014.
Stefan Stern, director of the High Pay Centre, said: “There is apparently no end yet in sight to the rise and rise of pay packages.” Would “fat cats who don’t pay enough attention to exports” have stated the matter more fairly?
Fox went on to ask: “What is the point of us reshaping global trade, what is the point of us going out and looking for new markets for the United Kingdom, if we don’t have the exporters to fill those markets?”
Certainly if you look through the detail of the statistics for British exports of goods, you do find some curious patterns. We see, for instance, that UK exports to Ireland are still greater than those to China and Hong Kong combined. Total exports to Sweden exceeded those to India. Well, Ireland and Sweden are a bit nearer to us.
In fact, when Britain was a “great free trading nation”, to use Fox’s words, British businessmen were all over China, Hong Kong and India. The empire followed trade, not the other way about. Those 18th- and 19th-century builders of businesses wouldn’t have found Ireland and Sweden profitable enough.
To take another example, a recent study found that the number of UK firms exporting to Latin American markets is still particularly low – especially given the scale and growth of consumption in Brazil and Mexico. France and Germany, for instance, export substantially more pharmaceutical goods to Mexico than we do. We have few historical ties with Latin America, of course, but then neither does Germany or France.
Demanding a culture change, Fox added: “People have got to stop thinking about exporting as an opportunity and start thinking about it as a duty – [including those] companies who could be contributing to our national prosperity but choose not to, because it might be too difficult or too time-consuming, or because they can’t play golf on a Friday afternoon.”
The golf on a Friday jibe is a bit insulting, but there is an important point here. As Fox knows only too well, it will take a number of years to strike new free trade deals with non-EU countries. Meanwhile, there is much that can be done immediately to improve Britain’s export performance.
An interesting analysis by Ernst & Young (E&Y) points the way. The big accounting firm argues that, over the long term, the most important factor is agility. Successful exporters identify and respond quickly to growth opportunities. E&Y observes that in recent years, especially compared to our peers in Europe, the UK failed to move either its market focus or its product portfolio quickly enough to exploit the opportunity created by the growth of the BRIC nations (Brazil, Russia, India and China). And as Brazil and Russia drop from the list of high-growth markets, the UK needs to be agile enough to move on to the next opportunities.
Perhaps Fox made his important plea in a cack-handed fashion, but the Government does need urgently to challenge British business to step up to the plate in a more aggressive fashion than it has been doing.
In the dangerous post-Brexit situation in which we find ourselves, starting to export, or increasing exports, should be the first item on every board agenda, at every business planning meeting and even over drinks at the clubhouse after a relaxing round of golf on a Friday afternoon.
British prosperity is in mortal peril, and that’s the point.
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