Trade and Investment for Growth White Paper

Nadhim Zahawi Excerpts

Wednesday 9th February 2011 Commons Chamber

[Vince Cable]

As far as the single market is concerned, I meet Mr Barnier regularly, and there is now a real momentum behind trying to implement the Monti report, which sets out how the single market can be deepened. There are key areas where Britain can do well—such as low-carbon products and services in general, where there are enormous obstacles to trade—and we will focus on those.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

May I thank my right hon. Friend, on behalf of small and medium-sized enterprises in Stratford-on-Avon, for the White Paper? His focus on exports and tackling some of the problems with the ECGD is absolutely right. I would like to bring to his attention the fact that export finance through banks is under threat from gold-plating by the Financial Services Authority and parts of Basel III. Such finance is a safe way of financing exports for our SMEs, and indeed all our businesses. The failure rate is 0.002%, yet it is in danger of being put in the same bracket as long-term finance, which would act as a disincentive for banks to fund export finance.

[Vince Cable]

As far as the ECGD is concerned, one of the things that we discovered when we investigated this matter is that Britain is far behind countries such as France—which has COFACE and other such agencies—in providing trade finance. That is the gap—the market failure—that we are trying to fill. I hear my hon. Friend’s point about banks in general—a point that the Chancellor dealt with a few moments ago. There is clearly an issue about the extent to which the FSA has overreacted in its interpretation of international rules.