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Brexit blues? Stay positive - international growth prospects look promising
For all the concern about Brexit, it’s important to recognise that the outlook of British businesses trading overseas is global, says John Carroll, Head of Product Management & International Business, Santander UK.
The latest edition of the Santander Trade Barometer reveals that while the European Union will be an important focus for UK firms over the next three years, other regions of the world will be crucial too.
37% of businesses in the research point to the eurozone as offering them the greatest prospects for growth in the years ahead. But almost as many, 33%, point to North America while a further 28% cite Asia.
This spread underlines just how exciting the opportunities for internationally-minded UK businesses are right now. It’s certainly the case that Brexit introduces uncertainties into the outlook for overseas trade, but there are many reasons to be positive.
Not least, the economic recovery of the eurozone over the past year: after a long period of stagnant growth, this has been a very welcome turnaround given that British businesses’ biggest trading partners are to be found in this area.
Outside the eurozone
Elsewhere, the North American economy’s growth has also been encouraging. It may be more challenging for UK companies to do business in the US and Canada, where regulation varies from state to state, but the chance to sell into the world’s biggest marketplace can make the effort worthwhile.
Then there is the rise of emerging markets, where the rapid growth of a middle-class customer base with strong demand for overseas goods offers real value – particularly to UK exporters able to leverage the undoubted cachet of the “Made in Britain” tag.
China, for example, is now the world’s largest ecommerce market, providing UK companies with a much more straightforward route to Chinese consumers than setting up there physically or selling direct in the country online. India is also an increasingly important buyer of British goods and services, while the Middle East offers new opportunities, particularly for the UK’s high-tech manufacturing business.
Optimistic, but cautious of international expansion
No wonder UK companies that trade overseas are so optimistic about the years ahead. Among businesses that already have international operations, 65% are confident or very confident their business will grow its turnover during the next three years; that figure rises to 72% amongst businesses now planning their strategies for international expansion. By contrast, only 61% of UK-only businesses are so optimistic.
This is not to suggest trading overseas is always simple and straightforward. And many businesses more focused on the UK have reasonable concerns about the process of doing business abroad. For example, 76% worry about how they will obtain reliable foreign representation, while similar numbers (75%) are concerned about how to identify overseas opportunities.
However, these barriers are not insurmountable, particularly with the help of trusted advisers:
39% of businesses look to their bank for support in growing internationally (this is the most favoured approach), while 26% say they are leveraging the experience of a partner already operating in their chosen market.
It’s worth seeking out that help. The opportunities for UK companies trading internationally are too valuable to ignore – just look at the 52% of international businesses in the Santander Trade Barometer which say their performance improved last year. And with the UK’s domestic economy expected to grow more slowly than many of its international peers in 2018 and beyond, it now makes more sense than ever to look further afield.
Read more about the Santander Trade Barometer.