Liam Fox's target for post-Brexit exports is wishful thinking

Larry Elliott
An earlier ambition to double exports to £1tn a year by 2020 was dropped by the international trade secretary, Liam Fox. Photograph: Hagen Hopkins/Getty Images

The timing of the government’s latest export drive is far from accidental. With Theresa May intent on showing Brussels that Britain could not just survive but thrive in the event of a hard Brexit, Whitehall has come up with a plan for increasing the amount of goods and services sold overseas.

This is by no means the first attempt to broaden the horizons of UK plc. Back in 2015, the aim was to double exports to £1tn a year by 2020. That always looked a stretch and the target was dropped by the international trade secretary, Liam Fox, early last year.

Now Fox has returned with a different target: to raise exports as a share of gross domestic product from 30% to 35%. The new plan involves encouraging firms to export, informing them of the opportunities available, connecting businesses to overseas buyers, and providing up to £50bn of export finance and insurance support.

Let’s be clear. There is nothing wrong with this motherhood and apple pie stuff but there is not the remotest possibility that this initiative will raise British exports by five percentage points of GDP. A year after the 2015 export plan was rolled out, the Institute of Chartered Accountants in England and Wales conducted a survey. It found that 53% of businesses exported in 2016, unchanged from 2014. Of the non-exporting firms, only 4% said they had plans to expand overseas in the coming year.

Ministers would dearly love Britain to be up there with Germany as a European exporting powerhouse, but have so far failed to learn the right lessons. Germany runs the world’s biggest current account surplus but that has little to do with export strategies cooked up by Angela Merkel’s officials in Berlin.

Put simply, Germany has top quality products that the rest of the world wants to buy. It has an enviable reputation for design, product quality and after-sales service. A competitive currency allowed Germany to build up its industrial strength in the 1950s and 1960s, and is still a helpful factor today. Finance and industry work in partnership, giving exporters long-term security. When global demand is strong, as it was during the post-war boom and has again been the case recently, Germany has a surge in exports.

There are opportunities out there, even with the shadow of protectionism hanging over the global economy. But seizing them is not a matter of setting Gosplan-like targets. It is not even a matter of signing free trade deals. It is a matter of getting the basics right.

House of Fraser’s woes bode ill for Mulberry

There are always knock-on effects when a big retailer fails. Orders are cancelled, stock is not paid for, manufacturers cut output and lay off staff.

So it was only a matter of time before the ripples from the collapse of House of Fraser became evident, and the luxury handbag manufacturer Mulberry was the first to go public with an estimate of its expected losses.

In a profits warning that at one stage wiped 30% off its shares, Mulberry said that as one of HoF’s creditors it would take a £3m hit from the department store chain briefly going into administration before being snapped up by Mike Ashley’s Sports Direct. There will be plenty of similar announcements over the coming weeks.

More worryingly for Mulberry than the £3m of losses is that the HoF collapse was symptomatic of structural change to the retailing sector that has led to a squeeze on spending power, consumers increasingly seeking out bargains online and a tendency to spend disposable income on experiences rather than a new handbag. If we really are close to “peak stuff” that’s not great news for a luxury brand.

Financial crisis unlikely to be viewed through beer glasses

Workers from a company that went to the wall during the Great Recession have decided to meet up for a drink.

In the normal scheme of things, this reunion would not grab the attention of John McDonnell, Labour’s shadow chancellor, who says the planned party is disgraceful and sickening. But this is no normal reunion: it is a proposed get-together for former London employees of Lehman Brothers, which collapsed in September 2008, precipitating a month of mayhem that brought the global financial system to the brink of collapse.

Will former Lehman employees really be toasting the part they played in the financial crisis? It seems unlikely. The talk, as at most reunions, will probably be about kids, sport and holidays. But Lehman is now a word synonymous with all that went wrong in 2008. And that’s why McDonnell thinks people having a few beers are fair game.