Manufacturers call for Government support as industry predicts surge in exports to emerging markets

The manufacturers' organisation made the call as a new survey, conducted by EEF with the Royal Bank of Scotland, showed that 70% of its members expected their overall exports to increase in 2012, with much of that business going to emerging economies including China and India.

In order to meet the Chancellor's target the UK would have to aim for an annual growth rate in exports of 9% - a rate equivalent to that of South Korea in the decade before the recession.

The report shows how exports are increasingly becoming the "lifeblood" of manufacturers, accounting for more than half the turnover in two fifths of companies. 65% of companies saw their exports grow in 2011, with a fifth of companies experiencing growth of more than 20%, according to the figures.

"These figures show that the 'march of the makers' is very much underway in export markets," said Lee Hopley, EEF's chief economist. "With companies stepping up their investment plans to grow their exports and enter new markets, this can only boost their performance still further."

George Osborne set out the Government's ambition to "more than double" annual UK exports to £1 trillion by 2020 as part of the Budget in March. The Government would, he said, expand the overseas role of its UK Export Finance credit insurer to enable it to develop finance packages to help UK exporters, and would assist with obtaining temporary private sector office space for new UK exporters in high growth countries.

UK exports to "major emerging markets" have been growing particularly strongly, according to Government figures. Over the past year, the value of UK goods exported to India has grown by 31% and to China by 15% - resulting in almost double the share of UK exports going to those two destinations from five years ago. The two countries accounted for almost 5% of total UK goods exports in 2011.

The EEF data backed this pattern of growth. Although the EU still accounts for around half of UK exports, the organisation said, exports to the so-called 'BRIC' emerging economies of Brazil, Russia, India and China had grown over the past decade from 2% of the total to 8%. In addition, while 90% of the companies surveyed already exported to these countries half of them expected their exports to increase this year – particularly to China and South East Asia.

In addition, there had been little change in the number of companies exporting directly from the UK rather than producing the goods in the overseas markets where they were intended to be sold over the last five years, EEF said, "highlighting anecdotal evidence that the trend towards offshoring has slowed". Evidence that companies were keeping manufacturing activity and investment "largely in the UK" was an encouraging sign for "rebalancing the economy", it said.

However, the EEF survey identified various barriers discouraging UK businesses from breaking into new markets, with over half the companies surveyed raising specific barriers to trade in countries such as Brazil or Russia as an obstacle. In addition, 38% of companies highlighted poor credit protection as a barrier to expansion, while 45% of companies doing business in China suggested that a lack of suitable protection for intellectual property (IP) rights was a specific issue in that region.