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Britain needs to refocus its efforts on exporting goods and services to countries such as India, a prominent forecasting group warned here on Monday.
Despite the impetus of the weak pound, Britain's exports had not revived as much as they could have partly because of a neglect of BRIC markets, the Ernst & Young Item Club said on Monday.
While around 10.6 per cent of German exports go to Brazil, Russia, India or China, and 11.1 per cent in the US, in Britain the figure is just 5 per cent, with the country failing to make the most of its Commonwealth links and focusing on the EU instead. This failure has resulted in Britain's share of global exports falling significantly: down from around 10 per cent in 1950 to a mere three per cent in 2009 - halted in between by the discovery of North Sea oil.
Britain's goods export to India — $4.5 billion in 2009 — has dwarfed the $11.3-billion from Germany, and is close to the values of both Italy and France — $3.8 billion and $3.4 billion, respectively. Only in services exports does Britain perform relatively better to Germany in India, with 2008 exports totalling $3.2 billion, against $2 billion from Germany (the overall figure for Britain to all BRIC nations is still smaller than the German equivalent).
Upbeat on India
However, the Ernst and Young club report strikes an upbeat note, noting the 25 per cent fall in sterling on a trade weighted basis between mid-2007 and 2009, a fall that has the potential to revive exports in the long-term.
Led by electrical, optical and other high tech items in the goods sector, and banking and financial services in the service sector, the Club predicts that exports could rise by around 8.5 per cent a year up till 2020.
Exports to India could rise the fastest. The club predicts that Britain's exports of goods and services to India will rise by a higher rate than to any other country, growing by 13.6 per cent between 2010 and 2020, against 12.7 per cent to China, 10.3 per cent to Brazil, 8.6 per cent to the US and 7.8 per cent to Russia.
“We think exports to India will increase across a broad range of industries, particularly in goods, rather than services,” Mr Andrew Goodwin, Senior Economic Advisor to the Ernst & Young Item Club told Business Line . He expects the biggest gains to come in areas such as optical precision instruments and other high tech goods, as well as transportation.
The report comes ahead of a new Trade and Investment White Paper - due to be published on Wednesday - in which the British Government will outline its plans for developing trade with other countries.
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