GBP5 billion cash injection for UK export finance
(30 March 2020 – United Kingdom) The UK government’s spring 2020 budget has promised GBP5 billion of funding for UK exporters, GBP3 billion of sporadic funding to stimulate export led growth and GBP2 billion of permanent annual funding to stabilise the impact of Brexit overtime. GBP2 billion from the scheme will be used to encourage exports of green growth technologies, while a further GBP1 billion has been allocated to the defence industry.
The move has been driven by the government’s pledge to support UK businesses post-Brexit, particularly exporters who have been directly impacted by a weaker Great British Pound (GBP). Ultimately, the government seeks to encourage exporters to invest in sustainability projects and the sale of defence-related goods and services in emerging markets.
The Treasury confirmed the funds allocated to UK Export Finance (Ukef), the Government’s export credit agency (ECA) that provides loans to overseas buyers of British goods and services, would help UK exporters to increase their global sales as Britain prepares for life outside the European Union (EU). The Chancellor expects the initiative to help top up the purchasing power of those abroad by providing a competitive loan rate through Ukef. The agency’s role is to ensure exports do not fail due to a lack of available finance or insurance for those looking to buy up Britain’s export offers.
It will be the largest increase ever handed to the Ukef, expanding its lending capacity from GBP3 billion to GBP8 billion.
There has been increasing concerns from leading economists that this funding package will not be sufficient to stimulate the planned growth in exports forecasted by the government however, given the current global economic crisis caused by the coronavirus crisis.
“This package, which is the highest level of export lending the government has ever made available, will provide support to industries and regions across the country. The Government will support business to seize these opportunities and thrive on the world stage” said UK’s Chancellor of the Exchequer, Rishi Sunak.
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