When the government took office last summer, it was clear that it wanted to boost UK growth and productivity by increasing UK exports, particularly those by small and medium-sized enterprises (SMEs).

Through e-commerce channels, the government and business leaders say there is great potential for SMEs to make a larger contribution to growing the UK’s goods exports. In fact, a 2022 report identified 70,000 small businesses with the potential to sell online cross-border that could add £9.3bn a year to the national income and create 152,000 additional jobs.

Launched at an E-Commerce Exports Week event at Chartered Accountants’ Hall, the E-Commerce Trade Commission has published a new report arguing for policy change across four areas to boost UK SME goods exports. These include:

• An overhaul of current export support services to create a suite of tailored measures for SMEs.
• A reduction in trade costs, expanding the number of overseas trade officials and the size of the Digital Trade Advisor network in the UK.
• Mitigating fraud and counterfeiting risks associated with e-commerce.
• Improving key parts of the infrastructure such as logistics costs and availability.

The push for change in these four areas is based on compelling research, which found that a comprehensive review of UK export support services is urgently needed. It should focus on how it might be optimally designed, resourced and what lessons the UK could learn from the success of similar services abroad, such as in Canada.

Many of the commission’s recommendations also chime with ICAEW recommendations to boost trade and growth drawn from members’ insights. These include reducing the cost and administrative burden of regulatory and tax compliance.

Alison Ring OBE FCA, ICAEW’s Director of Public Sector and Tax, is one of the E-Commerce Trade Commission Commissioners alongside Shopify Managing Director Deann Evans and Jen McCloskey, Google’s Global Tax and Trade Policy Lead, among others.

“E-commerce can be a critical lever for boosting our export market, which in turn supports economic growth,” says Ring. “Chartered accountants are well positioned to support and advise businesses that want to start exporting their goods and services. This report sets out some clear and sensible policy changes that could ease the path for SMEs to trade more overseas.”

Tailored support

Regional research among SMEs found the need for a “one-stop shop” for all export support, more mentoring schemes and partnerships to help SMEs access private sector advice, among other suggestions. The report also recommended that the government should commission an independent review of the UK’s export support arrangements.

Ministers should also develop “an export easements plan” with a set of clear objectives focused on making goods exports (including to the EU) easier through action on tax and regulatory compliance.

The plan should also identify where there is scope for implementing improved domestic measures and setting benchmarks to include key trade cost reliefs in future trade agreements. 

The E-Commerce Trade Commission also recommended that the government develop a “customs frictions mitigation plan” focused on improving the efficiency of the UK border. It should also encourage UK trading partners to improve customs costs “in a timely manner”. 

Access to finance

More SMEs need better access to financing options to export or for existing exporting SMEs to expand, the research showed. But SMEs are financially constrained and UK Export Finance (UKEF), which exists to financially support UK businesses with their export financing needs, has faced criticism with some arguing that its support facilities are insufficiently attuned to the needs of SMEs, according to the report.

Making flexible export grants available to SMEs through a wide range of public and private channels to increase the likelihood that more can access them is just one of the suggestions.

Trade costs remain an issue for SMEs too. Small business owners told the E-Commerce Trade Commission’s working groups that factors such as VAT, tariffs, regulatory compliance and customs bureaucracy were obstacles holding them back from exporting in some cases or exporting more in others.

The need to commission a focused review of how well the markets for foreign currency exchange and cross-border payments services work for SMEs was also recommended.

Managing risk and improving infrastructure

In the regional roundtables and sectoral focus groups, SMEs worried about the risks of fraud and counterfeiting in the shift towards more online commerce. This type of fraud costs UK businesses around £12bn a year, according to the OECD.

Other recommendations include the need to work with the private sector, trade bodies, consumer groups and regulatory agencies such as Trading Standards and the Intellectual Property Office, to develop an action plan to improve the response to counterfeiting in e-commerce.

The research also identified that some SMEs were “locked out of delivery services altogether”, while others stated that the costs were high. Navigating the market to find the right logistics services supplier was also raised as an issue, as was the challenge for some SMEs of managing multiple operators.

The commission said an independent review was needed to establish the extent to which the logistics sector was working efficiently or could work better for SMEs.   

E-Commerce Trade Commission – supporting SMEs

The E-Commerce Trade Commission was established in 2023 following findings from a report by the Social Market Foundation. The UK (9%) currently lags behind countries such as Canada (12.1%) in the proportion of SMEs that export.

House of Lords evidence backed this up showing that the proportion of the total value of UK goods exports accounted for by SMEs has been falling. It was estimated to be 40% in 2010, but to have fallen to 30% by 2020. This suggests considerable potential for a turnaround.

There is much to do before the UK’s SMEs enjoy an easier e-commerce cross-border trade experience, but on a positive note the report said the government should be encouraged by the growth in UK services exports in recent years.

In 2024, services exports to the EU were 19% above their 2019 level in real terms and 23% higher to the rest of the world. “This relative success indicates that an overall boost to goods exports is also likely to be achievable.”

To better support SMEs, the commission has relaunched its website: grow-with-ecommerce.com. The updated site shares support and resources to UK-based small businesses wanting to begin their international e-commerce journey or scale up their existing operations. It provides links to support from the commission’s members, which includes Amazon, Shopify and ICAEW.

“Many more small businesses can take the first steps on their international e-commerce journey by using the resources on the relaunched website,” says Ring. “ICAEW encourages businesses to also seek help from chartered accountants to help unlock international growth.”