The UK could unlock more than £9bn of growth by helping more small businesses to export using ecommerce, according to new research.
Significant gains could be made for the UK economy if more small businesses were helped to export goods using ecommerce. This is the conclusion of a new report, Just a Click Away, published by the Social Market Foundation (SMF), sponsored by Amazon.
By increasing SME ecommerce exports, the SMF said that ministers could raise economic growth and help ease the pressure on public finances. The findings indicate that more than 150,000 jobs could be created and £9.3bn in economic growth could be achieved. The report's figures have been supported by the Institute of Export & International Trade. Now, together with SMF and Amazon, it is calling on the government to launch an ecommerce exports taskforce to help the UK seize this opportunity.
While merchandise exports across other advanced economies are up 3.5% since the end of 2019, the UK's have fallen by 21%. SMF modelling shows the potential gains for UK businesses, employment and GDP could see as many as 70,000 more SMEs exporting, with their overall turnover rising by £12.4 billion.
The SMF research has also found that smaller British firms are less likely to sell online than their equivalents in high-export countries. Only 6% of UK medium-sized firms report making ecommerce sales to the rest of the world. This compares with 9% in Austria and 12% in Ireland. Among businesses that do not currently export, customs issues were the most frequently mentioned obstacle to doing so (30%), with logistics (25%) and tariffs (23%) second and third.
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More than 85,000 UK SMEs currently sell on Amazon, of which more than half export overseas. While these small businesses generated more than £3bn in export sales in 2021, overall exports declined from £3.5bn in 2020, partly as a result of the pandemic and also because of increased administration for cross-border sellers and customers following Brexit.
Amazon's European Fulfilment Network lets sellers transfer stock across Europe. Its Global Selling programme allows UK businesses to list and sell products on any of Amazon's 21 stores including the USA, Australia and Japan, with access to over 200 million Prime account holders.
Richard Hyde, senior researcher at the SMF, said:
"Ecommerce gives even the smallest business the scope to sell to new customers in other countries. Our modelling shows that policies helping more British firms to conduct ecommerce exports could deliver a real boost to the economy and jobs. That's a valuable prize at the best of times, but when ministers are having to take tough choices to balance the public finances, boosting growth jobs and tax receipts by helping British firms sell more abroad should be a high priority."
Greg Hands, minister of state for trade policy, said:
"This report highlights why it's so important we continue our drive to get more UK businesses exporting around the world. We know that when businesses export, it means more jobs, higher wages and a stronger economy, which is why this government is helping more of them get on the exporting ladder through events such as International Trade Week."
Written by Rachel Miller.