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Why UK needs 'radical' change as exports fall

UK economy 'failing' on exports: BCC chief
UK economy 'failing' on exports: BCC chief

The U.K. government needs to make radical changes to halt the slide in export growth, the head of British Chambers of Commerce told CNBC.

"Exports are tailing off, the rate of growth is tailing off -- it's the one part of the economy we are failing on," BCC's Director- General John Longworth told CNBC Europe's "Squawk Box" on Thursday.

"They always say that the definition of madness is carrying on doing the same thing as before and expecting a different result. We need to do something radically different as a country."

His comments come as the BCC published its third-quarter Trade Confidence Index on Thursday. The survey, carried out with delivery company DHL Express, measures U.K. exporting activity and business confidence of more than 2,300 exporting firms.

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It found that in the latest quarter, fewer exporters reported increased sales: 29 percent of exporters stated that sales had increased in the third quarter of 2014, a sharp drop from 47 percent in the second quarter.

Of those exporters no longer seeing an increase in export sales, most said that sales have remained consistent.

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"There has a slowdown in the U.K.'s export potential because of the slowdown global economic circumstances," Longworth said, or government export targets would be missed.

The U.K. Prime Minister David Cameron said in his 2012 budget that he wanted the U.K. to double exports to £1 trillion ($1.5 trillion) by 2020. In order to achieve that, however, Longworth said the U.K. would have to see export growth of nearly 11 percent year-on-year growth every year.

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"So far since the beginning of the recovery in 2010, the total growth in those years has been 14 percent. So we've got a real issue and unless we do something different we're not going to hit those targets."

Keeping interest rates low -- and therefore not driving up the value of sterling, which hinders exporters as it makes their goods less competitive – was "very important if we're going to continue exporting," he said.

"Currency isn't the only thing…We need to do a whole range of things to help exporters, there needs to be tax breaks, there needs to be proper trade support as well and that's one of the [U.K.'s] big weaknesses…We also want to sweep away the red tape that prevents exports."

Despite the rate of growth slowing or remaining static, exporters remain determined to expand their businesses internationally. Longworth called this finding the "one bright spot" in the report, 59 percent of exporting businesses believe that their profitability will improve in the next 12 months.

The BCC Trade Confidence Index was compiled online and through questioning the organization's 52-chamber network of branch offices.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt.