The UK space industry received a boost in the UK Government's Autumn statement which proposed to strengthen the role of UK Export Finance (UKEF) in a move to encourage UK exports as the UK leaves the EU.
The UKEF has faced requests by the space industry to step up to compete with the support provided by the other major export credit agencies: COFACE in France; EXIM in the US; Export Development Canada; and the Chinese export credit agencies (ECAs). Of the emerging market ECAs outside the OECD, the Chinese ECAs have shown the most dramatic increase in activity levels.
For several years, UKEF has stated that it has the capacity to support satellite transactions, equivalent to their other ECA counterparts. UKEF has actively being raising its profile in the space industry, and we are aware of several projects that it is currently working on - but there is some way to go before it has the same profile as ECAs such as COFACE.
August Statement Proposals
In the Government's Autumn statement on 23 November, the Chancellor announced doubling UKEF's risk appetite to £5 billion, and increasing capacity for support in individual markets by up to 100%. This will result in as much as £2.5 billion of additional capacity to support exports to certain destinations.
Key UKEF and trade measures include:
- doubling the financial support for UK exporters;
- the allocation of £79.4 million to the Department for International Trade (DIT) to develop and deliver an independent international trade policy- increasing the number of pre-approved local currencies in which UKEF can offer support from 10 to 40, enabling more overseas buyers of UK exports to buy British goods and services in their own currency; and
- an improved risk management framework and the use of private insurance markets to reduce the Government's exposure.
UKEF plan to make it easier for UK businesses to break into overseas markets and export UK goods and services to "ensure that no viable UK export should fail for lack of finance or insurance from the private sector".
In order to support UK trade policy more generally and the UK's exit from the EU, additional resource is planned to be provided to strengthen trade policy capability in DIT and the Foreign and Commonwealth Office, totalling £26 million annually by 2019-20.
It will be interesting to watch what this additional support will look like in practice particularly over the next few years.
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