Although economic forecasts for the Eurozone as a whole may be less than promising, individual countries across the continent still offer important openings for British SMEs.
The majority of Britain’s most important export markets are in the Eurozone, despite the recent rush to export to emerging markets in South America and Asia. EU countries account for 50% of services exports, and of Britain’s top ten trading partners, only three are outside the Eurozone. For UK small businesses seeking to expand, it’s crucial that trade both with the largest and the rebounding economies in Europe should not be overlooked.
Germany is Britain’s second largest export market after the USA. The German economy may have shown signs of shrinking earlier this year, but it remains the largest in Europe, and the economy is forecast to grow 1.2% overall in 2014, according to European Commission figures. Germany is already a dependable customer for vehicles, petroleum and healthcare (all strong British exports), and this highly sophisticated economy can provide openings for British SMEs in just about any sector, according to UK Trade & Investment. The European Commission predicts that Germany’s imports will further increase this year.
Britain’s next biggest export market is the Netherlands, worth more than £24billion in 2013. In many ways it provides Britain with a complimentary market to Germany, as here, the most promising of Britain’s exports are new technologies, food and drink and offshore wind. After two years of contraction, the economy is expected to show real GDP growth of 1.0% in 2014.
While there have been concerns that the French economy is flat lining, this is another country that is predicted to show growth of 1.0% in 2015. France is Britain’s fourth-biggest export market, and offers a wealth of opportunities for British SMEs, particularly in aerospace, automotive and pharmaceuticals. Like the Netherlands, France plans to increase its energy from wind power to 4.5 Gigawatt by 2020, offering opportunities for British businesses in this industry.
So across the Eurozone’s largest economies, there are still ample opportunities for British businesses. Meanwhile, some of the Eurozone’s recovering economies provide unique opportunities for Britain’s strongest-performing industries.
In Portugal, we’ve seen the recent economic recovery spurred on by the government’s scheme of privatisation and re-industrialisation, resulting in a wave of investment in the country’s transport system. For businesses here in the UK, cars, petroleum and vehicle parts account for over 20% of total exports and with the automotive industry in the midst of a revival, the opportunities for exports into the Portuguese market are on the rise.
Tourism is a priority for the Portuguese government, and contributed 3.1% to GDP in 2010. In Greece, too, tourism is of paramount importance, and indeed has led the economic recovery there. This development is expected to continue, presenting opportunities for Britain’s flourishing services sector to take advantage of an increasingly buoyant market.
In Italy and Spain, two other recovering outlets for British exports, it is renewable energy that is prospering, with Spain aiming to reduce its energy usage 20% by 2020, and Italy needing to cut energy consumption by 25% by 2020 in the industrial and trade sectors. Recognising this opportunity, the CBI recommends renewable energy as a sector in which the UK has a significant competitive advantage, with the trade surplus in this sector currently at £5bn. For instance, UKTI has drawn attention to Italy’s Milan Expo 2015, an exhibition around the theme ‘Feeding the Planet, Energy for Life’, as an event offering opportunities for British businesses.
In short, the statistics on the Eurozone obscure localised areas of potential and ignore long-term trading links, where demand for British exports is as high as ever. SMEs seeking to take advantage of these strategic opportunities have many resources at their disposal, from the UKTI teams in importing countries to the UK export finance initiative (UKEF), which along with partnering institutions will provide £3billion in support to UK exporters as of 6 October. If British firms capitalise on this opportunity, exports stand to play an even bigger role as one of the supporting pillars of economic recovery and growth.
by Sophie Reed