European Union state aid law is preventing the launch of two export finance schemes announced by the Government in 2012, leaving British exporters in "urgent" need of help to bolster trade in an increasingly comptitive global market, IBTimes UK can exclusively reveal.
While the £5bn (€5.9bn / $7.7bn) Export Refinancing Facility (ERF) and the £1.5bn Direct Lending Scheme (DLS) should have already launched, discussions between the Treasury, UK Trade & Investment and the British Bankers' Association are still taking place, as they try to navigate EU law and make sure the schemes are compliant.
"Since the announcement of the exports refinancing facility last year, the Government has been working on the design of the scheme to ensure that it can be implemented effectively whilst protecting the public finances and being compatible with EU State Aid rules," a government spokesman told IBTimes UK.
"UK Export Finance continues to provide considerable assistance to UK exporters through its existing facilities."
EU state aid law bans governments from providing financial help directly to companies where it would give them an unfair advantage over their competitors.
However, the law does allow flexibility in times of economic hardship when government intervention is necessary.
The Treasury announced ERF in July 2012, declaring it a major new initiative that would "provide long-term loans for overseas buyers of UK exports at competitive rates by guaranteeing a series of short-term bank loans".
Ministers promised the scheme would be supporting loans by the end of the year, but it has not yet come to fruition.
In his autumn statement, Osborne announced that the Treasury would let UK Export Finance make £1.5bn in loans to ﬁnance small ﬁrms' exports under DLS, something which would be in place by 1 April and complement ERF, but this has also been held up.
Jon Coleman, chairman of the British Exporters Association (BExA), told IBTimes UK that ERF and DLS "represented the commitment of significant and much welcomed government support to the UK's exporters.
"We are therefore very disappointed that neither of these schemes is yet available. The requirement for implementation of both products is no less urgent now than when they were announced."
The World Trade Organisation slashed its growth forecast for 2013 trade to 3.3 percent, down from its past estimate of 4.5 percent as economic crisis continues to bite #across the globe.
Osborne has set a £1tn target value for UK exports by the end of the decade.