Category: Trade credit & political risk · Reviewed by Amy Price, Account Executive · Last reviewed 2026-06-05
UK Export Finance (‘UKEF’) is the UK government’s export credit agency — the operating name of the Export Credits Guarantee Department — providing insurance, guarantees and loans to support UK exports and outward investment, with statutory functions under the Export and Investment Guarantees Act 1991 and operations governed by the OECD Arrangement on Officially Supported Export Credits.
Category: Trade credit and political risk Also known as: UKEF, Export Credits Guarantee Department, ECGD (historical name) First codified: Export Credits Guarantee Department established 1919; modern statutory basis Export and Investment Guarantees Act 1991 Related legislation: Export and Investment Guarantees Act 1991 [1]; Public Finance and Accountability (Scotland) Act 2000 (for Scottish public finance interactions) [2]; Public Bodies Act 2011 [3]
UK Export Finance is the operating name of the Export Credits Guarantee Department (ECGD), the UK government’s export credit agency. ECGD was established by Royal Charter in 1919 to support UK exports in the post-war recovery, making it one of the oldest export credit agencies in the world. UKEF operates as a ministerial department within HM Government, reporting to the Department for Business and Trade, with the Secretary of State for Business and Trade as the responsible Minister [4][5].
UKEF’s principal functions are: providing export credit insurance for UK exporters covering political and commercial non-payment risk; providing guarantees to lenders financing UK exports (the Buyer Credit Guarantee being the principal product, supporting bank lending to foreign buyers of UK exports); providing direct lending to foreign buyers of UK exports (the Direct Lending Facility); providing bond support to UK exporters (the Bond Support Scheme); and providing political risk insurance for UK outward investment under the Overseas Investment Insurance scheme [4][5].
UKEF operates as a ‘lender of last resort’ philosophy — it does not compete with the private market for routine export credit business, but provides support where the private market lacks capacity, where transactions are too long-term or politically sensitive for private cover, or where strategic UK national interests are engaged. The agency has a substantial ‘business commitment’ (the maximum exposure it can take across all products combined, currently £60bn under the Export and Investment Guarantees (Limit on Foreign Currency Liabilities) Order 2018 as subsequently amended) [4][5].
The Export and Investment Guarantees Act 1991 is the principal statutory basis for UKEF. The Act empowers the Secretary of State to make ‘arrangements’ under section 1 for providing insurance, guarantees and other financial support in connection with exports and outward investments. Section 2 sets a financial limit on the total exposure of UKEF, currently expressed in sterling and foreign currency limits subject to periodic revision by Order [1].
The OECD Arrangement on Officially Supported Export Credits (commonly the ‘Arrangement’) sets disciplines that apply to UKEF and other OECD member-state ECAs. The Arrangement covers minimum premium rates calculated by reference to country risk classification, maximum repayment terms by sector and risk category, minimum down payments, and disciplines on tied aid and on specific sectors (ships, aircraft, nuclear, renewable energy, climate change-related projects). The disciplines do not apply to private market insurers [6].
The Berne Union (International Union of Credit and Investment Insurers) is the principal international association of public and private export credit insurers. UKEF is a long-standing member and participates in Berne Union discussions on market practice, credit information sharing and country risk assessment [7].
UKEF is subject to oversight by the National Audit Office and the Public Accounts Committee, with its operations and financial position audited annually. Major transactions are subject to ministerial approval and (for the largest and most politically sensitive transactions) to Parliamentary disclosure under the Export Control Act 2002 reporting framework [8].
The OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence set environmental and social standards applicable to UKEF transactions. UKEF screens transactions against these standards, with category A (high environmental or social impact) transactions subject to detailed due diligence and disclosure [9].
A UK exporter seeking UKEF support typically approaches the agency through one of its product channels. For short-term export credit insurance, UKEF offers the Export Insurance Policy (EXIP) for transactions where private market cover is not available. For medium and long-term transactions, the principal products are the Buyer Credit Guarantee (supporting bank lending to the foreign buyer), the Supplier Credit Facility (providing UKEF guarantee on UK bank lending to the supplier), and the Direct Lending Facility (UKEF lending directly to the foreign buyer in sterling) [4][5].
For bond support, UKEF provides the Bond Support Scheme, under which UKEF shares the credit risk on contract bonds (performance bonds, advance payment bonds, retention bonds) issued by UK banks for UK exporters. The scheme enables exporters to obtain bond facilities that the bank would not provide on its own credit, particularly for higher-risk markets or larger transactions [4][5].
UKEF’s underwriting process involves credit assessment of the foreign buyer, country risk assessment of the importing market, environmental and social due diligence (under the OECD Common Approaches and UKEF’s own policies), assessment of UK content (UKEF supports transactions with a defined minimum UK content, typically 20%–50% depending on the transaction), and (for politically sensitive transactions) ministerial review [4][5].
Premium pricing follows the OECD Arrangement minima for transactions falling within scope. For short-term transactions outside the Arrangement (typically under 24 months), UKEF prices broadly in line with private market rates, with cover available where the private market would not be present. The agency’s role is therefore complementary to rather than competitive with the private market [4][5].
Export Insurance Policy (EXIP): short-term export credit insurance for individual transactions where private market cover is not available. The primary UKEF product for SMEs and one-off transactions.
Bond Support Scheme: shared-risk facility for contract bonds, enabling UK banks to issue bonds with UKEF credit support.
Buyer Credit Guarantee: guarantee to a UK bank providing direct lending to the foreign buyer of a UK export. The principal product for major UK capital goods and infrastructure exports.
Supplier Credit Facility: facility providing UKEF guarantee on UK bank lending to the supplier where the supplier extends credit terms to the foreign buyer.
Direct Lending Facility: UKEF direct lending to foreign buyers of UK exports, denominated in sterling and at fixed interest rates.
Overseas Investment Insurance: cover for UK outward investment against political risks (expropriation, currency inconvertibility, political violence). Less significant in volume than the credit and guarantee products but addressed by political risk insurance.
Climate change-supported products: UKEF has expanded climate-related support including the Clean Growth Direct Lending Facility for low-carbon projects and dedicated UK content rules for clean growth transactions, reflecting UK climate policy.
General Export Facility: working capital support for UK exporters, providing UKEF guarantee on bank working capital facilities used to support export business.
A UK manufacturer of railway rolling stock secures a £150m contract to supply trains to a state-owned railway operator in a developing market. The transaction requires deferred payment terms of 10 years with quarterly instalments. The buyer’s commercial bank cannot provide the financing on its own credit, but with UKEF support an arrangement is structured under the Buyer Credit Guarantee: a UK bank provides a £130m loan to the foreign buyer’s government (the host state acting as borrower) with UKEF guaranteeing the bank against non-payment. The remaining £20m is paid by the buyer at delivery as down payment. UKEF’s guarantee fee is calculated under the OECD Arrangement minimum premium framework and reflects the country risk rating of the importing state. The transaction supports approximately 800 UK manufacturing jobs and contributes to UK export performance. Figures in this example are illustrative.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
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