Trading our way to prosperity – let’s get local

10 June 2019
By Natasha Thomas
Director of Government Relations
Sage
Natasha Thomas

Most business leaders in the manufacturing sector today think data-driven production is shaping the future of their industry. In practice that means connecting assets to inform process improvements, understanding customer preferences and behavioural patterns to increase revenue and improving decision-making capabilities.  

The same principle could equally apply to government. With an increasing trade deficit and stagnating productivity, there is ample opportunity for local communities and governments to take a similar approach and harness the power of data to drive up trade and exports. 

Despite recent growth in exports of 3 per cent compared with last year, a global survey by Sage showed UK businesses are the least likely across thirteen global markets to be trading – at 24 per cent in contrast to 76 per cent in Spain and 58 per cent in Canada.  And broken down by region variations are equally stark. In the North East, small and mid-size companies are half as likely to export as they are in London.

Driving up trade is important, given the proven links between increased trade and increased productivity. So is a data-led approach to boost trade, given there is a 5x difference in productivity of SMEs within every UK region.  Whilst national insights are helpful, a one-size-fits-all approach to driving up trade is unlikely to work. Sector strengths, international links and infrastructure capabilities vary dramatically from one locality to another.  Government-led plans to drive up trade must empower communities with data sets that tell us much more than they do at the moment. 

Greater Manchester’s Internationalisation strategy 2017-20 sets a comprehensive framework for such an approach, but still calls out a lack of data where “the quality of our trade data intelligence…. is currently limiting our ability to target effectively and enable us to identify our key supply chains and pinpoint companies …. with export potential.”

In the newly formed North of Tyne combined authority, where Sage was founded, we are collaborating with our MP, Mayor and business groups to create a strong plan for SME growth. There are around 24,000 SMEs in the new combined authority and a range of sector strengths in terms of turnover and employment, from construction to professional and accommodation and food, such as a cluster of micro-breweries in rural Northumberland. 

Logically, the North of Tyne’s new export strategy to boost SME productivity should be armed with data on clusters like the micro-breweries of Northumberland, where they are exporting to and how this compares with similar verticals across the rest of the UK.

A data-driven export plan would be highly engaging, giving companies in specific information on where their sectors are selling abroad, setting up peer to peer networks, informing which new flight or shipping routes to open up links to overseas markets from local transport hubs, introducing interested buyers to the region or funding a presence at key sector specific trade shows.  

There are some encouraging signs of progress.  The new North of Tyne authority, with support of Department for International Trade (DIT), Sage and other businesses, has agreed that a data-driven SME growth plan will be critical and is looking opportunities to partner with data scientists to find a solution.

In other regions like Manchester, HMRC is working with partners such as the Manchester Growth Company and The Scaleup Institute to help identify exporters.  And this year Tech Nation collaborated with DIT and the World Economic Forum to twin UK scaleup clusters with international equivalents showing similar trajectories.   

But there is still a huge untapped opportunity in the hands of central government.  The combined force of knowing which companies are trading, where and when, could be truly powerful for tackling low productivity, and could pave the way for departments like HMRC reframing their relationship with business, driving growth across the UK.

Sector strengths, international links and infrastructure capabilities vary dramatically from one locality to another.  Government-led plans to drive up trade must empower communities with data sets that tell us much more than they do at the moment