Secretary of State for Scotland Michael Moore explains what support there is for businesses looking to spread their wings and break into global markets
Scotland has a long and proud tradition of trade and investment with the rest of the world. Whether it be bales of Scottish wool packed off to Bruges in the 15th century; linens exported to America in the 1700s; jute and jam shipped from Dundee in the 19th century; Glasgow’s position as the worldwide centre for the shipbuilding industry during the early-20th century; or Scottish whisky’s recent rise as the pre-eminent Scottish export to more than 200 markets worldwide: our wealth and development as a country has long depended on our willingness to travel and engage with foreign trading partners, presenting the best of Scotland to the world.
As Secretary of State for Scotland, I am committed to ensuring the Scottish business community has the support it needs to continue that tradition – and build on it.
My UK government colleagues and I have set ambitious targets to double UK exports to £1 trillion a year and get 100,000 more companies, including SMEs, exporting by 2020. At the same time, we want to maintain the UK’s position as the most favoured location in Europe for inward investment and double the UK’s stock of Foreign Direct Investment (FDI) by 2020.
There can be no doubt that these are hugely challenging targets, particularly in the area of exports. The UK’s relatively weak trade performance for most of the last four or five decades has been a drag on economic growth, and recent figures for Scotland continue to provide cause for concern. For example, the latest Scottish Index of Manufactured Exports showed a 4 per cent fall in real terms during Q2 of 2012. And our economy still suffers from unhealthy imbalances. While our strengths in areas such as financial services are to be valued, we need to take action to diversify the range of businesses operating in Scotland, ensuring resilience and a wider range of employment opportunities for future generations.
So we must do everything in our power to meet the targets we have set. Improving Scotland’s trade performance is hugely important for the simple reason that, if we do not, all our economic futures will be bleaker. The economic model of the years running up to the financial crisis is fundamentally broken. For all of the insecurities we face – in a world economy beset by worries about sovereign debt, woes in the Eurozone, weakening global demand – there are some things we all know for sure. We know we cannot rely on consumption fuelled by debt, or on government spending funded by debt, to drive growth. And the only other way of driving growth and creating jobs – the only way of creating sustainable growth, in fact – is through trade and investment.
Research shows that exporting makes companies more competitive, productive and resilient. It helps create the firms which will be the backbone of the Scottish and wider UK economy in the future.
So in Scotland we need to see a step change in our trade and investment performance and we all – the UK Government, the Scottish Government and the business community – have a role to play in delivering success. We have great materials to work with. Scotland excels in textiles, life sciences, renewable energy, education, financial services, oil and gas and food and drink. And in pursuing our goals, the UK Government is working closely with the Scottish Government, particularly its trade and investment body, Scottish Development International (SDI). Whatever our political differences, trade is an area where both governments recognise the vital need for a genuine Team Scotland approach. That is why we are also working closely with organisations such as the Scottish Council for Development and Industry, whose support last year for a trade mission to Brazil which I led (the largest ever Scottish trade mission) was hugely valuable, providing a showcase for the diversity of the Scottish economy, from technology companies to oil and engineering companies, from legal services to creative industries.
We are also working collaboratively with key partners in the private sector, such as RBS, which is able to use its global reach to support Scottish businesses in building towards international success. RBS deserves credit for the work it is doing to support Scottish and wider UK companies in this space. I see value, for example, in its Global Account initiative, which enables SMEs to open an in-country account using the RBS international network, with a dedicated UK Relationship Manager. And I was delighted that the Royal Bank agreed to work with UK Trade & Investment (UKTI) earlier this year in order to support a campaign highlighting key business opportunities across 12 Asian markets to UK firms. The programme runs until March 2013 and includes a programme of events and the development of practical guides to ensure businesses gain the knowledge and confidence they need to succeed in the Asian markets.
For my part, I visited Brussels earlier this month to meet with the European Commission, pressing the case for Scotland’s marine energy and oil and gas industries. I followed that with an official visit to Canada and the US, where, among other priorities, I argued for the modification of regulatory frameworks to help foster the growth of Scottish business there. And next year I intend to return to Brazil, a potentially huge market for Scottish business, to follow up on the trade mission I led at the end of 2011. These visits have allowed me to see at first hand the enormous potential for the Scottish economy in established and emerging markets.
As well as the wider support we are offering to Scottish businesses – including by keeping interest rates down and cutting corporation tax to 21 per cent from 2014 – the tailored support on offer for Scottish businesses looking to break into overseas export markets, and for foreign investors wanting to do business in Scotland, is already significant. I want to encourage Scottish firms, including SMEs, to take advantage of that support.
UKTI offers an outstanding network of more than 1,200 staff in more than 100 overseas markets. It provides local knowledge, access to decision makers and networking opportunities, and the influence that being part of the UK, as a major power, brings. This is just one of many benefits that Scottish businesses gain from Scotland’s place in the UK.
UKTI works closely with SDI, which, with its complementary presence in 14 overseas markets, provides direct advice and services to Scottish-based businesses, including access to UKTI services. Through this partnership, firms based in Scotland benefit from UKTI’s national trade services, such as the Overseas Market Introduction Service, trade missions and trade fairs, and from SDI expertise.
In addition, UK Export Finance currently supports around £2.5 billion-worth of UK exports and investments each year, and the UK Government announced in the Autumn Statement earlier this month that it will establish a new scheme to provide up to £1.5bn of loans for the purchase of UK exports. The scheme will focus mainly on transactions below £50 million and will act as a backstop when there is no other suitable finance available.
That is not to say that more cannot be done. During my extensive engagement with businesses throughout Scotland, including through the Scottish Business Board that I established, it has become clear that the support on offer could be improved. That is why I have asked Brian Wilson, the former UK Trade Minister and current UK Business Ambassador, to bring his outstanding business experience to bear on a review of support for Scottish exporting. The Wilson Review, which will report next year, will produce recommendations as to how government and the private sector can improve the support available to Scottish companies seeking to export, with a view to improving Scotland’s export performance and growing the Scottish economy.
Scotland’s economic future depends on our willingness to look outside our borders, export our excellence to the rest of the world, and welcome the world when it comes knocking at our door. The UK Government and its partners stand ready to do all we can to support Scottish businesses as they seek to make that future a reality.