How Ebury can help importers share in the benefits of a growing economy
05/Aug/2014 • International Trade•
Smarter finance can help boost import growth within the UK economy
Imports are essential to the wider economy, and growth in imports has been identified by HSBC as linked to increased manufacturing productivity. Their Importing for Export Success report, published January 2014, shows that up to 12% of the increase in manufacturing productivity between 1998 and 2008 could be accounted for by an increase in ‘intelligent imports’. These imports add value to products and manufacturing within the UK, making them highly desirable.
“While there are concerns about the UK’s trade deficit, this research shows that imports used in the right way benefit UK businesses and the overall economy by boosting productivity and driving export growth. Far from being the enemy of UK manufacturing, they are the overlooked ally of many smart businesses,” said Alan Keir, chief executive of HSBC.
Business investment is now reaching the highest levels since 2008, rising 2.7% in Q1 2014 according to the Office of National Statistics. But disappointing trade figures have led some to ask when this investment will begin to make a difference for importers and exporters.
Linking import growth to export growth is essential, and understanding the flows of currency in trade can benefit every business, as Alan Keir states in the HSBC report:
“By importing component parts to enable us to be more efficient, our skilled workforce and capital is focused on areas where we can compete and stand out from other nations. UK businesses need to ensure they are importing the right goods at the right point in the supply chain in order to maintain competitiveness, establishing a clear position in the global supply chain where they can best add value to drive growth.”
The above clearly shows that imports are important for the UK economic growth. “Intelligent imports” are raw materials and parts for manufacturing on UK soil. This in turn, creates manufacturing jobs, and fuels exports. But if that is all good – why don’t we see more imports to the UK?
Part of the reason could be payment terms. For example, Chinese exporters will often ask for an advance before starting manufacturing and full settlement of payment before goods arrive in UK ports. China being a large trade partner of the UK, with £42.5 billion traded in 2013, clearly affects many UK based businesses. Working capital constraints, together with limited financing options creates a huge problem, especially for UK based small and medium sized businesses.
We’re seeing more and more businesses looking into alternative financing options such as trade finance to help resolve this issue and continue growth.
If you think your business could benefit from Ebury Trade Finance, apply online now.