At present, the bilateral trade in goods and services between the two nations is worth an estimated £7.7 billion. That’s £3.6bn to the UK and £4.1bn to Brazil. Brazil is the UK’s largest trading partner in Latin America and is expected to grow from the eighth to the fifth largest economy in the world by 2050.
George Osborne reiterated the significance of balancing of imports and exports in the UK during his 2014 budget announcement. Exports from the UK have largely underperformed in recent years, and the concern is that the country’s recent consumption-led growth will become unsustainable without pick-up in this sector.
According to reports, the combined value of goods and services exported to the largest emerging markets (including Brazil) amounted to less in 2013 than those sold in Belgium.
Greater access to such overseas opportunities is imperative to the success of British business. In response to these concerns, the chancellor set a target of boosting UK exports by £1 trillion by 2020, which would make Britain the most competitive export finance in Europe and on par with the United States.
So what does this mean for UK business?
In order to boost trade, Osborne has pledged to overhaul UK Export Finance’s (UKEF’s) direct lending programme. Under this programme, the government can provide a loan to overseas buyers who need to finance the purchase of capital goods and/or services from an exporter carrying on business in the UK. In light of Osborne’s announcement, the funds available to this initiative will double to £3bn and interest rates will be cut to the lowest permitted levels.
UK and Brazilian bi-lateral trade
The department for UK Trade and Investment (UKTI) has resolved to back British businesses seeking to secure contracts in Brazil and it’s no secret that both the 2014 World Cup and 2016 Olympics will present significant export opportunities for UK businesses.
Speaking of the potential trade relationship between the two nations last year, the business secretary Vince Cable said: “Brazil is one of the fastest-growing economies in the world and I want to make sure British companies are aware of the opportunities. On my second trip to Brazil since becoming Business Secretary I will promote the UK aerospace sector, which has potential for more growth. It’s vital that businesses showcase our world-class capability to manufacturers in markets like Brazil so we can take advantage of new opportunities and get more jobs in the UK.”
Certain sectors of the Brazilian market have experienced higher than average growth, such as air transportation, telecoms, oil and gas, and mining.
In addition, the Government of Brazil are currently ploughing around US$470 billion into development of the country’s energy generation and infrastructure as well as stadiums, as it prepares for the World Cup in 2014 and the Olympics in 2016. This opens up a number of other opportunities for UK companies, including construction, aerospace and aviation, electrical power, safety and security devices, environmental technologies, retail, and transportation.
According to UKTI, 90 per cent of Britain’s exporters are SMEs. What do you think – does the World Cup 2014 present greater export opportunities between these two nations?
Graphic from Aldermore.co.uk