Government signs deal with major banks to raise exports post-Brexit
Banks will now receive a guarantee from the government's UK Export Finance to decrease the usual risks of lending to small businesses
Good news for the UK's export-focused small businesses: The government's export credit agency UK Export Finance (UKEF) has agreed a deal with the country's biggest high street banks to make finance more readily available to small businesses to increase UK exports.
Announced by trade secretary Liam Fox, UKEF has partnered with Barclays, HSBC, Lloyds Banking Group, RBS and Santander as part of its wider plans to support exports and keep the economy afloat after Brexit.
Currently, the UK is lagging behind a number of European countries where exports are concerned – such as Germany – and there are worries that trade from UK businesses could weaken following last year's EU referendum result.
To counterbalance these concerns, the government will now provide a guarantee to banks to reduce some of the usual risks that come with lending export-related finance, such as bonds and working capital loans that are required by overseas buyers, to smaller companies.
UKEF will take on 80% of the risk of this export finance agreement in the hopes of “lifting a common barrier to exporting” for smaller firms.
According to the department for trade, since 2011 UKEF has provided £500m funding to 300 small businesses across the UK – generating “billions of pounds” in overseas contracts.
It will look to increase this figure as it works with banks to extend the funding available to exporters and their suppliers, as Fox explained:
“As an international economic department, this new partnership shows the Department for International Trade’s commitment to help small businesses seize the global demand for British exports.
“Providing that finance to suppliers as well as exporters means spreading the benefits of global trade, supporting more jobs and growth for companies large and small.”
On channelling more funding to export-focused small businesses, John Mahon, head of Barclays Corporate Banking, added:
“Delegated authority will make accessing UKEF guarantees simpler for many businesses and will help companies we work with grow more quickly.
“Both exporters and companies involved in international trade through supply chains will benefit, and we look forward to further collaborating with UKEF and our colleagues across the industry to find more new and innovative ways to help UK businesses take full advantage of export opportunities.”