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Chancellor uses trade trip to Brazil to hail further finance support to back British exporters

At the start of a three day trade trip to Brazil, the Chancellor of the Exchequer, the Rt Hon George Osborne MP, announced the next stage in the government鈥檚 fundamental overhaul of finance for British exporters.

The Budget announced expansion of public-sector direct lending; today the Bank of England announced plans to . These measures will move the UK to the top of the global league for export support.

In a speech to business leaders in Rio de Janeiro, the Chancellor:

• announced, following discussions with the Governor, a significant step to increase availability and cut the cost of private-sector lending for exporters, and welcomed the Bank of England giving finance guaranteed by UK Export Finance (UKEF) access to its Sterling Monetary Framework facility, to help make such lending less risky
• confirmed a doubling in size of the UKEF direct publicly-financed lending facility for exporters to 拢3 billion and the cutting of its interest rates by a third

Taken together these measures for private and public export finance, which have been welcomed by key British exporters, will help achieve the government鈥檚 aim to give the UK the most competitive export finance in Europe and put it on a par with the United States.

In 2012 to 2013 UK Export Finance provided loan guarantees worth over 拢2 billion in total. Today鈥檚 new announcement could help reduce the cost of private-sector export finance loans by 5 to 10 basis points.

Following the Budget, the (BExA) revised its rankings to show that the UK now has some of the most competitive support for export finance.

The Chancellor also announced:

• (UKTI) will invest 拢4 million a year to triple the number of mid-size business advisors to support the export ambitions of 3000 companies, as part of its new strategy
• UKTI will invest a further 拢2 million a year to increase its presence in Latin America to mirror the successful expansion strategy it has pursued in China

The Chancellor announced that part of this additional investment in Latin America will be focused on ensuring a lasting infrastructure investment legacy from the partnership between Britain and Brazil as consecutive hosts of the Olympic Games.

The Chancellor said UKTI will focus on backing British businesses seeking to secure contracts in over 拢1.5 billion of infrastructure projects around Brazil.

This will build on the 拢1 billion worth of contracts UKTI has helped British companies secure in Brazil in 2013 to 2014.

The Chancellor is meeting with a range of British companies exporting to and expanding in Brazil. During his visit:

• Rolls Royce is announcing a commitment to build a 拢22 million marine facility in Rio de Janeiro
• Lloyd鈥檚 announce that Hiscox decision to join their Brazil reinsurance platform will boost the amount of business it does in Brazil

The Chancellor鈥檚 started his trip in Rio de Janeiro with his keynote speech followed by visits to Rolls Royce, Lloyds of London, and GE Wellstream.

He then travels to Sao Paulo where he will meet with his Brazilian counterpart, Guido Mantega, and the Governor of the Central Bank of Brazil, Alexandre Tombini.

He will finish his trip to Brazil on Wednesday with a visit to the Brazilian Stock Exchange and meetings with the finance and asset management industry.

The Commercial Secretary, Lord Deighton, who played a leading role in delivering the London Olympics accompanys the Chancellor on the trip.

Over the last decade the Brazilian Economy has tripled in size, and now ranks as the seventh largest in the world.

UK trade with Brazil has increased by over fifty per cent in the last four years but still accounts for less than one per cent of total UK exports.

In his speech the Chancellor said:

For decades we have not been exporting enough - not just to Brazil, but to all the fastest growing markets in the world.

So I am confronting that historic weakness head-on.

In my Budget last month I fundamentally reformed our export regime.

I cut the tax on flights to emerging markets, including Brazil, so that you don鈥檛 pay more to fly to Rio or S茫o Paulo, or indeed Beijing, than Washington or New York.

And I massively extended the financial support we give to our exporters.

I am doubling the amount of government lending for exports and cutting the interest rates on that lending, by a third.

I am clear: Britain will no longer have some of the least competitive export finance in Europe. We are going to have the most competitive export finance in Europe.

But the job is never done and so today I can announce further reforms.

Where Budget boosted government lending - today we will boost private lending too.

Banks will now have access to a special Bank of England facility that will make it much less risky for them to extend loans to our exporters.

That should mean billions of extra lending will be made available to our exporters.

And it will mean cheaper lending - saving potentially millions of pounds for large projects.

That鈥檚 how we make British exporters competitive.

The Chancellor鈥檚 trip comes during the government鈥檚 in which over 70 nationwide events are taking place to encourage small and medium sized businesses to export.

Speaking about the increased investment for UKTI, Lord Livingston, Minister for Trade and Investment, said:

Mid-sized businesses have the potential to be economic powerhouses for the UK economy, creating jobs and growth for all regions of the UK.

Exporting helps companies grow and increasing support for small and medium-sized companies is a vital part of the government鈥檚 long-term economic plan to create jobs and reduce the deficit.

Research shows that exporters do better with UKTI鈥檚 help and this new money will allow us to offer every mid-sized business a relationship manager who can provide tailored trade advice and an intensive programme of support to help them break into new markets. I encourage any company with global ambitions to contact UKTI.

Mike Rees, deputy group chief executive of Standard Chartered Bank, said:

Stimulating trade is fundamental to the health of the global economy and from a UK perspective, a vibrant export market lies at the heart of sustaining strong economic growth.

The government has made clear its ambition to double UK exports by 2020 and this move gives banks an increased level of comfort for lending which is guaranteed by UKEF. It will enable the banking sector to better support UK businesses who are already exporting or who wish to start doing so.

Alan Keir, chief executive HSBC Bank plc added:

HSBC welcomes the changes announced today by the Chancellor and Bank of England that will provide further support to British exporters.

By giving finance guaranteed by UK Export Finance (UKEF) access to the Bank of England鈥檚 Sterling Monetary Framework facility exporters are assured of more sustainable and affordable funding even in times of stress.

Mark Elborne, GE president & CEO, UK & Ireland also added::

We welcome the recent announcements by the UK government which mark a significant shift in support for British exporters.

In 2013 GE committed 拢16.3 million and 拢11.2 million to R&D expenditure, creating in excess of 122 new jobs and safeguarding 88 existing jobs at Wellstream in Newcastle.

We welcome the Chancellor鈥檚 further commitments to support UK manufacturers and exporters and as a result of the overhaul of UK Export Finance we now expect to use its facilities to support future exports to Brazil

Nigel Taylor, senior vice-president at Airbus, said:

Airbus, as a major UK exporter and many of whose customers benefit from UKEF support, welcomes this initiative which should make UKEF guaranteed paper more liquid and therefore contribute to reducing the overall pricing of export credit.

拢22 million Rolls-Royce Marine facility to be built in Rio de Janeiro

The Chancellor announced on Monday that Rolls-Royce is to build a new Marine facility in Duque de Caxias, Rio de Janeiro.

The new facility, which will provide testing and assembling of thrusters and engines to equip Petrobras鈥� drillships helps Rolls-Royce further expand their operations in Brazil in the Energy and Marine sectors.

Rolls-Royce is one of the world鈥檚 leading manufacturers and has a growing presence in Brazil. They now employ around 600 people in the country, across operations in Rio de Janeiro, Sao Bernardo do Campo, Niteroi and Macae.

In the last year UK Trade and Investment have supported British companies in winning over 拢1 billion in contracts in the oil & gas and marine sectors in Brazil. With their help Rolls Royce was awarded an 拢86 million energy services contract by Petrobras in November 2013.

Chancellor welcomes insurer鈥檚 plans to boost Brazilian activity

The Chancellor has welcomed the decision by insurer Hiscox to join the Lloyd鈥檚 Brazil reinsurance platform during his trip to Brazil.

Joining the Lloyd鈥檚 Brazil platform will allow Hiscox to grow its Brazilian business, enabling it to talk directly to potential customers and better understand the local market.

It comes on the same day that the Chancellor met with leading members of the Brazilian insurance sector to discuss the key issues facing the industry at Lloyd鈥檚 Brazil鈥檚 Rio de Janeiro headquarters.

Since Lloyd鈥檚 became the first international reinsurer to receive authorisation to operate in Brazil following reforms to the market in 2008 it has grown into the second largest reinsurer in Brazil, with a market share of 12%.

Lloyd鈥檚 Brazil鈥檚 structure mirrors the unique market structure of Lloyd鈥檚 in London and, currently, ten managing agents have co-located 鈥榣iaison offices鈥�: ACE, ANV, Argo, Beazley, Catlin, Kiln, Liberty, Markel, Navigators, Starr and now Hiscox.

Lloyd鈥檚 has reaped the benefits of being onshore in Brazil. The ten managing agents with offices in Brazil have grown faster than those without 鈥� 112% average growth per year for those in Brazil compared with a Lloyd鈥檚 market overall average of 21% from 2008 to 2012.

The government published an insurance growth action plan in December 2013 to enhance the position of the UK insurance sector as a global leader and increase its contribution to economic growth. The action plan identified Brazil as a key target market for the growth of the UK insurance sector, and the government will develop a co-ordinated, targeted approach to promotional and other activity to help UK insurers grasp the available opportunities in Brazil.

拢500,000 transformational funding for UK-Brazil youth group 鈥楩ight for Peace鈥� announced

Chancellor George Osborne has visited a celebrated UK run charity, the Fight for Peace Academy, in Rio de Janeiro where he announced the government would grant 拢500,000 to fund the completion of a purpose built 鈥淔ight for Peace Academy鈥� in East London.

Founded in Rio by Briton Luke Dowdney MBE, uses martial arts combined with education to help young people in communities that suffer from crime and violence. After its success of in Rio, the decision the project was replicated in Newham in 2007.

However their existing facility in London is running at capacity, with caps imposed on a number of sports sessions, waiting lists for education courses and even some young people being turned away.

The funding for the project will nearly double the site鈥檚 square footage, providing additional classroom space, multiple sports training areas and significantly increasing the number of young people they are able to work with.

The Chancellor鈥檚 visit to Rio follows a reception hosted for this London branch of the organisation at 11 Downing Street in November 2013.

In Rio he was shown the headquarters of the project as well as the activities offered following a short tour through the streets of the local Complexo da Mar茅 community with children and young people from the project.

He also attended training sessions and presentations of boxing, capoeira, judo, taekwondo and jiu-jitsu and met pupils from Fight for Peace鈥檚 education classes.

In 2013 Fight for Peace supported 2,500 young people directly, and 90,000 young people indirectly, through its network of partners operating in 22 different countries around the world. By 2016, FFP will be working in 50 countries.

Launch of a regular Economic and Financial Dialogue

Following their meeting Tuesday afternoon the Finance Ministers of Brazil and the UK, Minister Guido Mantega and Chancellor George Osborne, announced the launch of a regular Economic and Financial Dialogue between their two countries.

The dialogue between one of the world鈥檚 major emerging markets and one of the world鈥檚 largest advanced economies will strengthen mutual cooperation and boost trade and investment.

拢375m fund to promote development though science and innovation announced

Chancellor of the Exchequer George Osborne has launched a 拢375 million fund to promote economic development though science and innovation at the University of Sao Paulo on the final day of his visit to Brazil.

The newly named 鈥楴ewton Fund鈥�, will improve the science and research capabilities of emerging powers and strengthen ties with Britain.

The fund will lay the foundation for ongoing collaboration between the partner countries and the UK, promoting the UK as an international partner of choice and seeking opportunities for commercial collaboration as we work towards sustainable global growth.