UKEF expands direct lending to support industrial exports under new strategy - Trade Treasury Payments

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UKEF expands direct lending to support industrial exports under new strategy

UK export credit agency UK Export Finance (UKEF) has unveiled a £13 billion expansion of its Direct Lending Facility, reinforcing the agency’s role in delivering the government’s new Industrial Strategy and supporting British exports across priority sectors.

The additional financing, announced by Business Secretary Jonathan Reynolds, marks a £3 billion increase in UKEF’s lending capacity. It will be available to overseas buyers of UK capital goods and services, with funding spread across all eight strategic sectors identified in the Industrial Strategy, including clean industries, life sciences, advanced manufacturing and defence.

A minimum of £3 billion will be allocated specifically to support defence exports, a sign of the sector’s rising economic and strategic weight within UK trade policy.

“UKEF plays an instrumental role in delivering our Industrial Strategy,” said Reynolds. “By unlocking export opportunities and supporting innovation across key sectors through mechanisms like direct lending, UKEF is helping to drive sustainable economic growth, create highly skilled jobs and strengthen Britain’s place as a go-to trading partner.”

The move builds on recent lending activity, including an £18.8 million-equivalent loan to support a clean water project in Angola, tied to around £6.8 million in UK export contracts, and a £23 million-equivalent loan to Iraq’s Ministry of Interior for 62 British-made fire-fighting vehicles.

Alongside the uplift in direct lending, UKEF also announced the launch of a new loan guarantee scheme aimed at strengthening critical minerals supply chains. The product, first outlined in the Autumn Statement, will support UK-based suppliers selling either critical minerals or products containing them to UK exporters.

Further changes are expected to follow. UKEF plans to legislate for an increase in its statutory commitment limit, which defines the total financial support the agency can hold on its books at any one time. The department has also confirmed a review of its operating mandate, which could pave the way for an expanded role in trade and investment finance.

Tim Reid, CEO of UKEF, said, “UKEF is well positioned to drive exports across high-impact industry sectors and create economic growth. We look forward to playing a key role in driving delivery of the Industrial Strategy, using our increased capacity and flexible product range.”

To complement its expanded toolkit, UKEF will grow its network of export finance managers, with a particular focus on city regions and industrial clusters. These managers offer free, impartial advice to businesses navigating the complexities of export finance.

The new measures precede the release of UKEF’s 2024/25 annual report, which is expected to reflect a record year for the agency. In 2023/24, UKEF provided £8.8 billion in support to over 650 companies, contributing up to £3.3 billion to the UK economy and supporting as many as 41,000 jobs.

Further details on the legislative plans and business strategy are expected in the weeks ahead.