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This report from UK think tank the SMF looks at how increasing SME e-commerce exports can boost UK’s economic growth.

The UK has had an exports problem. Since the financial crisis of 2008, it has been lagging behind its pre-crisis trend. This has been further compounded by the COVID-19 pandemic, where UK exports have failed to rebound after the global economy re-opened, in contrast to other countries. In this report, we show how SME e-commerce can help tackle this problem and why it should be a key focus of trade policy efforts. Increasing the proportion of SME retail, wholesale and manufacturing businesses that are e-commerce exporters could deliver considerable benefits to the UK economy. We’ve estimated that in a ‘stretching’ scenario with 70,000 additional SMEs becoming e-commerce exporters there would be: – £9.3 billion boost in gross value added (GVA) terms and – 152,000 additional full time equivalent jobs (FTE). However, there are a number of key barriers to both SMEs starting to export including customs (30%), logistics (25%), tariffs (23%) and taxes (23%); and SME’s already exporting such as customs (21%), taxes (17%), tariffs (16%), the cost of logistics (16%), insurance (16%), and currency (16%). Government support for firms can make a difference to overcoming these barriers and increasing a firm’s exporting success.

We recommend a range of policy measures that government can take to tackle these obstacles:

Domestic:

• Ensure trade e-commerce and digital trade policy is coherent and coordinated across the myriad of departments that have an interest in these areas by setting up an Office for E-Commerce and Digital Trade (OE-CDT) to ensure these conditions are present.
• A package of measures to encourage “experimenting” with exporting by SMEs, with initiatives such as a “starting exporting” grant scheme and an expansion of the Help to Grow: Digital scheme to provide more support for firms to pursue cross-border digital trade opportunities.
• An overhaul of DITs and HMRC web presence around exporting so that it is more small business friendly.

International:

• The UK Government should push for agreement on and the ratification of the nascent e-commerce agreement under the auspices of the WTO, alongside arguing for the unique needs of SMEs to become a central organising principle of WTO activity.
• Negotiate for de minimis customs thresholds in trade agreements as well “informal entry” customs processes for low-value trade, modelled on the US approach, if a rigorous evaluation suggests the US experience has delivered benefits.
• Work to incorporate best-in-class SME and e-commerce chapters into all future trade treaties with other countries.