Manufacturing or Services: Which Matters Most?

Manufacturing or Services: Which Matters Most?

According to the British Chambers of Commerce (BCC), the UK is set to miss the government’s target of hitting £3 trillion worth of exports by 2020.  The real story here is of untapped potential. The services sector is running a trade surplus but the BCC’s International Trade Survey reveals that only 23% of UK services firms currently export.  Are services firms overshadowed by manufacturing when it comes to getting attention and support for exporting?  Or is it a question of balance?

 

Targets and Criticisms

Exporting is a hot topic when it comes to statements.  The 2012 government figure of £3 trillion by 2020, for example, or the Trade Secretary’s opinion that British business is “fat and lazy.

However, the real issues arise from a more detailed analysis. 53% of manufacturers surveyed by the BCC currently export their goods, with another 13% planning to do so within the next two years.

The story is different for the services sector, with only 23% of firms surveyed exporting.  And yet, the UK ranks as the second highest exporter of services in the world, behind the US.

Is there a disconnect here, with more emphasis being placed on manufacturing for export when the services sector actually has so much potential?

There is a sense, perhaps, that manufacturing represents something more substantial to a lot of people, and, in the current climate of Brexit, it harks back to a supposed golden age when the UK was a large-scale manufacturing nation.

UK manufacturers tend to be more specialised, concentrating on key markets, particularly in engineering, aerospace and the automotive sectors.  If the UK is going to grow as an exporting nation, how can we strike the right balance?

 

The Need for a Radical Shift

The BCC is calling for a change in how the UK supports export businesses, focusing on strategies and providing practical support.

It notes that, with regard to services, there are key markets outside the EU, including the US, China and the United Arab Emirates.

One aspect the BCC stresses is how perceived language barriers and cultural differences currently deter UK firms from becoming exporters. Consequently, one of its key measures in its Business Manifesto is to make foreign language learning compulsory in British schools from age seven to 16.

Ultimately, growing the UK’s exports requires a balanced approach, which looks at exporting potential across various business sectors, and where to focus on key developing markets.