LONDON (Reuters) - British exporters must target fast-growing economies outside the euro zone and the United States to end years of underperformance and give the struggling UK economy a shot in the arm, the Confederation of British Industry said on Monday.
The CBI said a strategy to boost exports to countries like China, India and Brazil would give the stagnant economy a lift worth 20 billion pounds, or 1.5 percent of GDP, by 2020.
Britain’s economy is on the brink of recession after barely growing in the last year and it faces acute risks from the debt crisis in the euro zone, its biggest trading partner.
“The continued crisis in the euro zone underlines just how important it is for the UK to diversify its export efforts to high-growth countries,” said CBI Director-General John Cridland.
“Given that we are already playing catch-up with many of our competitors, we must act now.”
In a report released for its annual conference, the CBI said government talk of increasing trade must be matched by action, such as tax breaks for exporters, better access to export finance and improved transport links.
Legislation should face a new test to ensure it doesn’t harm exporters and ministers should rethink a new bribery law and immigration caps which have undermined business confidence, the CBI said in a report written with Ernst & Young.
“Too often businesses are finding that the government’s public rhetoric (on exports) does not match the reality,” Cridland said.
Prime Minister David Cameron and Chancellor George Osborne have pinned Britain’s recovery hopes on an expanded private sector investing and exporting more.
Britain’s share of global exports fell to 4.1 percent in 2010 from 5.3 percent in 2000. Germany’s share rose to 9.3 percent from 8.9 percent, the CBI said.
Only four percent of Britain’s exports go to Brazil, Russia, India and China, compared to 43 percent to Europe and 17 percent to the United States.
The CBI blamed the decline on Britain’s focus on advanced economies and its inability to break into emerging markets.
Britain has an edge in areas like financial services, communications, construction and hi-tech products and should expand its share of the global market, it said.
With other advanced economies also trying to export more and consume less, the process will be tough.
Britain’s goods trade deficit widened in September to its highest since the series began in 1998 after a record rise in imports, official data showed this month.