Trade so often gets lost in the political narrative or board level priorities of investors and companies. Why is this when it is so fundamental to economic growth and competitiveness? No more so than the UK which is 60% dependent on trade and, arguably, more hard wired into the international trade system than any other economy.
In today’s highly disruptive world, agility is critical to ensuring supply chains are more resilient and competitive, and companies have the working capital they need to grow their businesses. Today, companies need real-time information at the click of a button and to have the ability to move capital and goods at speed to avoid unnecessary cost and risk.
This is not possible in a fragmented, paper-based system that is overly complex, slow and inefficient. Put simply, we are expecting businesses to meet the needs of 21st century trade in a system that operates in the 20th century and is unfit for purpose. It is a car crash. Given a choice, no-one would design a trade system like the one we have yet we are choosing to accept it, instead of modernising it to meet the needs of today.
At a domestic level, the importance of an attractive business environment is well understood yet at international level it is not prioritised. This is particularly perplexing in economies, like the UK, that are dependent on international trade for economic security and the prosperity of every citizen.
Trade dialogue so often focuses on tariffs, trade agreements and market access as the answer when all of these fail to grasp the importance of the need to modernise the overall trade environment where the benefits dwarf all of these combined. Where is the vision, ambition and leadership to take us to where we need to be? Nowhere is the answer.
We are moving rapidly into a world that is digital yet seem to ignore the importance of digitalising the trade environment which is the real growth opportunity. The digital transformation of the trading environment is long overdue and the time to do it is now. Growth and investment are driven by confidence and certainty yet there are no bold statements that give the impression anything is changing at certain or at scale.
For example, if the UK government set out a vision to be the best place to trade digitally, set ambitious goals to be paperless and backed this with investment in digital trade infrastructure this would provide the long-term clarity businesses need to invest. It would drive innovation and digital solutions to problems that plague the trade system every day. The government does this for industries like life sciences, AI or defence. It is a proven path to incentivising growth, yet this approach is not applied to international trade.
The UK has world class digital trade law, policy frameworks and innovation capabilities but is failing to leverage these strengths and incentivising companies to invest in the transition to digitalised trade. Unsurprisingly, adoption is low and growth stumbles along at 1% when the government has the opportunity to unlock £25 billion in growth, £224 billion in efficiency savings and £22 billion in working capital.
At the same time, the cost of living and pressure to improve public services gets tougher year on year. The numbers simply don’t add up. Are we now accepting that 1% growth is enough when we know this will not fund the improvement to standards of living that we need? And why is a screaming opportunity to finally drag trade into the 21st century being consistently ignored when trade is so central to economic growth and security?
The searching question is why is this not understood in HM Treasury and why aren’t companies pushing harder at government to make it happen? It is not rocket science. Remove barriers to trade and improve access to finance and the economy will grow. Trade digitalisation does all of this and more.
If we do not get a grasp of the bigger picture and opportunity, we are choosing to sleepwalk into a world where we become less competitive. No country will have squandered this opportunity more than the UK where the government have been repeatedly advised on what to do and repeatedly ignored the advice. The question is why and who.
The opportunity is not new and nor is it a political party issue. Trade digitalisation is a rare agenda that is non-political, where everyone understands the basic premise that we need to be more digital and yet the required transformation still doesn’t get the attention it deserves. We have had multiple governments, and all have ignored the opportunity which begs the question whether this is a leadership issue in business and the civil service.
To anyone under 40 the issue is unfathomable, let alone to anyone under 30 who are digital natives and rightly expect trade to be digital. Who wants a job that is 35 hours a week of administration and checking paper documents? The answer is no-one.
The Budget was yet another missed opportunity to implement G20 commitments and present an exciting reform package that unlocks growth. Instead, the conversation was yet again about micro bilateral trade agreements and bizarrely about the price of gherkins. It was the 10th Budget of exactly the same where action to improve the trade environment was ignored.
If I was a Cabinet Minister or Prime Minister, I’d be asking searching questions on why we are not capitalising on the opportunity. I would be demanding change, using every lever across government, setting goals and leveraging every opportunity to incentivise the digitalisation of trade and ultimately growth. I’d also be challenging everyone who doesn’t get it and ignores the evidence when others do.
G20 and G7 are fantastic opportunities for the government to lean in hard on shaping the future of 21st century trade which must be digital and will benefit the UK. But, to do this requires a shift in gears and a change of mindset at home. We need vision, ambition and leadership. Less focus on micro thinking, more delivery on market shaping initiatives that boost business confidence and growth and more engagement with the international community who, I have no doubt, will embrace what is being said.
