UKEF expands protection against non-payment for UK exporters
UK Export Finance to offer insurance in all major markets in response to COVID-19
UK Export Finance announced on 3 April that it is expanding the scope of its Export Insurance Policy (EXIP) to cover transactions with the EU, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and the USA with immediate effect. Exports from the UK to these markets account for 74% of all international sales from the UK.
According to the press release, the UKEF will help companies concerned about the impact of COVID-19 to export with confidence, by offering insurance that can cover up to 95% of the value of an export contract. The insurance will protect against the risk of non-payment should UK exporters’ customers become insolvent or their government actions make fulfilling the contract impossible.
More than 240,000 businesses exported goods and services from the UK last year and over 95% of these were SMEs.
The COVID-19 pandemic is expected to put pressure on the ability of exporters to agree payment terms, while commercial credit insurance may become harder to obtain. By insuring against non-payment with UKEF, UK suppliers will have the confidence to continue trading and can offer more flexible payment terms to overseas buyers.
UKEF has extended its cover to include countries that were previously excluded from the scheme after the European Commission relaxed rules this week regarding the provision of short-term export credit insurance.
The expanded list of coverage is a welcomed step. International trade in goods and services plays a significant role for UK technology businesses. The guarantee extended by the UKEF will provide additional confidence for UK exporters and will further support the UK’s digital economy to adapt and recover from COVID-19 period. However, this step can go even further to ensure that important regions for UK’s technology businesses, including India, China and the wider Asia-Pacific region, are not left behind.
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