UK Trade and Investment Business Specialist Steven Spalding says European nations are spending big on infrastructure, so don’t miss out
What should a company do to boost its bottom line during the current economic recession?
British companies have a competitive advantage in Europe because of the low value of the pound against the Euro. Suppliers can therefore off er main contractors a cheaper product or service, which means more profit for them and more work for you. There are other advantages, such as currencies that can be hedged. But to move now will also give companies a toe-hold in these markets later on.
Which countries should companies target?
The three countries we have been looking at are Germany, France and Spain. Between them they have €108bn (£77bn) of non-tax money set aside for infrastructure as part of their fiscal stimulus packages to deal with the recession.
This is a staggering amount of money.
This includes the automotive industries as well as construction, but in tangible projects France has €4.9bn (£4.2bn), Germany €18bn (£15.4bn) and Spain €2.2bn (£1.9bn).
When should companies make a move for some of this stimulus money?
These projects are short term, and over in two years − no government wants to overstimulate their economy as this will stoke inflation.
Where does this money come from?
This is government money − in Germany the total amount is €82bn (£71bn), and this is money that will need to be spent, as president Angela Merkel wants to keep people in employment. With these packages you have money coming in at the top of the pipe, so that is money in the pipe and coming out at the bottom and into people’s pockets.
Should companies be promoting themselves abroad in the middle of a recession?
The European Union (EU) is a far less risky option to go and do business in. There is no import duty, which is especially helpful if your company has local subsidiaries. Legal systems are not without their challenges, but the EU helps to standardise.
How do British companies find out where the stimulus money is being spent?
All EU government spending is listed on the Official Journal of the European Union (OJEU), so you can pick up free tender information. If you are a tier two or three supplier, you just have to look to find out who the main contractor is, and the notice will list everything, including the quantity of the contract. You can then use UKTI to connect you up with the right company.
Are there any other benefits to working in the European Union?
With all these countries we have a significant trade imbalance, so any work on these schemes will help that. With Spain we have the largest imbalance, but Germany is our largest EU trading partner. When things are built, regular spending will continue. To develop a presence in these markets, now is a good time.