George Osborne looked painfully isolated on Wednesday as news broke of the shock 0.7% contraction in the UK economy, deepening the double dip recession beyond even his worst fears. It couldn’t have come at a worse time, since the news will make David Cameron sound desperate in his appeals for international investment in Britain in his planned series of Olympic trade summits over the coming weeks.
Amid the furore, John Longworth, director general of the British Chambers of Commerce made sure that the voice of the private sector was heard loud and clear: ‘We need a government that will pull the levers only it can reach to help companies export, invest, create new jobs and grow.’ Well, yes. That’s great if, like Jaguar Land Rover, Rolls Royce or (cough) G4S, you are in a prime position to pick-up a flagship government contract.
But what about everyone else?
According to the ONS, over half of the private sector’s annual £3tn turnover is generated by just 6,000 organisations. From a total of 4.5m UK enterprises, that’s some going. What’s more, these 6,000 provide stable jobs for over 10 million of us, too. Prosperity here would give a serious boost to consumer confidence.
It’s perhaps not unreasonable for the government to focus on big contracts and on making life easier for SMEs, on the assumption that the enterprise sector is big enough to look after itself. But with domestic trade in sharp decline, many large UK businesses have been forced to look abroad for new sources of revenue in order to stay afloat. So, the question is whether they are any good at it.
Some are outstanding. British online fashion and beauty retailer, ASOS, for example, routinely reports huge revenue growth from overseas custom and recently announced Q2/12 year-on-year sales growth in US, EU and ‘rest of world’ countries of 83%, 27% and 61% respectively.
Others, not so much. Our research suggests that 64% of senior executives in large enterprises don’t even count the internet in their top three channels for driving overseas trade. Simply put, this has to change. If the private sector is to create an exports-led springboard to economic recovery it must embrace the internet as the primary vehicle for attracting global buyers to British products and services.
The global e-commerce sector is evolving fast. The biggest inhibitor to this is the absence of the knowledge and skills needed to use the power of the internet to trade in foreign language markets. It’s no-one’s fault that these traits aren’t typically found in a business that has grown up operating in the UK alone, but it is a problem. That said, for those that do skill up (and there are plenty that have), the truth is that it has never been easier for a business to start trading abroad.
As the UK is gripped by the worst double dip recession since World War II, the phrase ‘keep calm and carry on’ seems to be everywhere. Yet for big businesses, this great British wartime maxim could not be less fitting. Instead, they should apply the chancellor’s much-needed ‘relentless focus’ and get serious about using the internet for global trade. It could be the key that finally opens door marked ‘Growth’, which, for the past few years, has remained stubbornly locked to all but a few.
Ian Harris is CEO of Search Laboratory, a specialist search engine marketing consultancy.