UK pilot to offer overseas buyers up to £5 billion in loan guarantees
The UK Export Finance pilot, called Flexible Finance, will cover up to 80% of a commercial loan for select buyers in fast-growing economies such as Brazil, Morocco and Mexico.
Overseas buyers in fast-growing economies such as Brazil, Morocco and Mexico will be offered UK Export Finance loan guarantees, worth up to £5 billion in total, to encourage them to buy goods and services from British companies. The pilot was announced by the Chancellor and set out in a news release by HM Government published on GOV.UK.
The new product, called Flexible Finance, is aimed at select buyers in markets where, according to the release, British exports could be greater. UKEF guarantees under the pilot will cover up to 80% of a commercial loan for those buyers. The release says this widens access to finance for the foreign borrower and establishes a relationship with UKEF.
Unlike UKEF’s existing guarantees, the product will give borrowers greater flexibility in how they use the funding. The release says it will also encourage buyers seeking finance to work with the UK by taking up UKEF support and choosing British suppliers. UKEF will partner with borrowers to grow their imports of goods or services from British companies, and will engage with UK suppliers through matchmaking and procurement support.
The government says the initiative will help British exports gain a foothold in high-growth economies, creating jobs and stimulating growth in the UK. According to the release, it follows the Chancellor identifying “Backing Britain” through procurement and jobs as one of his main priorities.
A statement in the release calls Flexible Finance “a new approach” and says it is part of an argument to be made in a speech in Liverpool on Monday. The statement says British businesses are being backed to strike more deals overseas, especially in fast-growing countries without a big British footprint.
The pilot is the latest of various additions to UKEF’s offering as it responds to the Industrial Strategy, the release says. It follows the launch in June of a new defence export facility, which increased UKEF’s capacity for supporting defence exports by £50 billion.