UK will be 15 years late in hitting £1tn annual export target, figures show

Exclusive: Forecasts predict exports will fall to £707bn next year and target will not be reached until 2035

Ministers have been accused of leaving a “record of failure and broken promises” as internal forecasts show Britain will be 15 years late in achieving its £1tn annual export target after being hit by Brexit.

Projections from the Department for International Trade (DIT) show the value of UK exports will not reach £1tn until 2035, based on current trends, with the total due to fall to £707bn next year.

The deferral underlines how difficult British ministers have found it to meet the lofty predictions Brexiters made about international trade after leaving the EU.

The pledge was first made by David Cameron in 2012, with the initial goal to hit the £1tn mark in 2020. But Boris Johnson later gave an end date of 2030 upon reviving the promise in 2021 as the centrepiece of a campaign called “Made in the UK, sold to the world”.

However, new figures show Britain will not achieve £1tn until 2035. They emerged in a parliamentary answer by Andrew Bowie, the minister in charge of UK exports.

The estimates are based on forecasts from the independent Office of Budget Responsibility (OBR), which show exports falling from £739bn last year to £707bn next year, before rising again to £725bn by 2027.

Bowie said in his statement: “Extrapolations of the Office for Budget Responsibility forecast suggest £1tn exports could be achieved by around 2035 without additional intervention.”

He also blamed external factors for the UK’s lagging performance. “We recognise the speed by which the UK reaches this milestone will be impacted by macroeconomic factors such as global demand and exchange rates,” he said. “This has proven to be the case over the past year where we have experienced external shocks and a spike in inflation,” he added.

Tina McKenzie, the policy chair of the Federation of Small Businesses (FSB), said: “Trade barriers, including red tape, sluggish economic performance domestically and globally and insufficient export support have led to the continued suppression of exports. Our research shows one in eight small exporters have temporarily or permanently stopped sales to the EU, with a further one in 10 considering doing so.”

The FSB suggested changes to trade policy, such as a new fund to support small exporters and changes to UK-EU trading terms, could help ministers boost the numbers sufficiently to still hit the 2030 target.

Nick Thomas-Symonds, Labour’s shadow international trade secretary, said: “The Conservatives’ record on exports is one of failure and broken promises. In 2012, they pledged to reach £1tn of exports by 2020. Six chancellors and four prime ministers later, the OBR predicts the target will be hit 15 years late.”

He added: “This failure will mean the UK missing out on growth and job opportunities, risking us falling further down the world economic rankings.”

Vote Leave said during the Brexit campaign: “If we vote leave and take back control, we will gain the power to strike our own trade deals, creating new business opportunities and creating more jobs.”

But British exports slumped after the country left the EU, with companies suddenly hit by extra border checks and disruption at customs points. In January 2021, British trade recorded its biggest monthly drop for 20 years.

In recent years, the government has found it hard to conclude negotiations with large and complex economies such as India and the US. Such bilateral agreements were something the UK was unable to do as a member of the EU, when it had to participate in Europe-wide deals.

So far, ministers have signed deals with Australia, New Zealand, Japan and Singapore.

They hope to make progress on the India and US trade deals tin 2023, with the US president, Joe Biden, planning a visit to the UK later this year to mark the 25th anniversary of the Good Friday agreement. But that visit – and the entire trade deal – may depend on whether the British government can first reach an agreement with the EU over the Northern Ireland protocol.

The OBR has previously said the impact of Britain leaving the EU will be to weaken the position of the country’s exporters. Ministers are maintaining their target, however, hopeful that new policies and trade deals can boost international trade sufficiently to hit it.

Cameron originally promised to meet the £1tn target by 2020, but in 2019 the UK exported just £689bn.

Boris Johnson relaunched the £1tn target in 2021 as the government looked for ways to reverse the decline and showcase Brexit benefits. At that time they unveiled “Made in the UK, sold to the world”, which involved providing businesses with loans for exports and access to trade experts.

A UK official told the Financial Times in 2021: “This is the first time we have had an export strategy since leaving the EU.”

The UK’s decision to choose a hard Brexit with the departure from the single market resulted in the loss of four freedoms to trade – in labour, capital, goods and services.

Last year, a senior EU official said the UK’s trade with the EU declined by nearly 14% in 2021 compared with 2020. Maroš Šefčovič, the European Commission vice-president and Brexit negotiator, said: “Brexit has increased red tape, not decreased it. It is no longer as frictionless and dynamic as before. This holds true for both goods and services,” he said.

A spokesperson for the Department for International Trade said: “We’re promoting the UK’s world-class exporters to help them take advantage of global opportunities and sell more of their goods and services across the globe.

“Our landmark 12-point export strategy will challenge government and the private sector to reach £1tn worth of exports a year sooner than predicted.”


Kiran Stacey

The GuardianTramp

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