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British businesses look beyond Brexit to international trade opportunities
While Brexit continues to pose significant headaches for UK businesses, many are also keen to focus on the opportunities ahead for increased global trade, new Santander research shows.
Indeed, Santander’s fourth annual Trade Barometer report reveals that significant numbers of businesses are already exploiting such opportunities.
With time running out to clinch a trade deal between the UK and the European Union (EU), it is inevitably the case that British businesses continue to worry about the uncertainties of Brexit. With negotiations on a trade deal ongoing, many firms are not yet sure on what terms they’ll be trading with partners and customers in the EU from January onwards.
However, while resolving these uncertainties must remain a priority for policymakers, many businesses are working hard to ensure they do not inhibit international expansion.
- More than one in five businesses (21%) in the Trade Barometer say it has become easier for UK firms to win EU business since the 2016 referendum.
- More than a third (35%) say the same of winning non-EU business.
Significantly, businesses that currently trade only domestically, but which have plans for international expansion, are particularly likely to take an optimistic view. These aspiring international businesses are far more likely to say trading opportunities have increased since the Brexit decision.
- 58% think overseas firms are keener to trade with the UK.
- 57% say it is now easier to win new non-EU business.
Which potential post-Brexit trade agreements should be prioritised?
Moreover, many more businesses are now thinking in global terms. Asked which potential post-Brexit trade agreements they would like to see prioritised, 36% cite the US, while 23% pick out Australia and 22% stress the need for deals with both China and the Trans-Pacific trade partnership. Of the EU’s current international trade agreements, UK businesses would most like to see deals with Canada, the European Economic Area (EEA) (both 15%), and Switzerland (11%) rolled over. Japan was also cited by 11% of respondents, who will have welcomed the trade deal announced by the UK Government in September.
In all, some 35% of businesses in Trade Barometer say they’ve experienced no negative impacts at all so far as a result of Brexit. Still, with the UK and the EU still in the post-Brexit transition period, there will be challenges ahead. Already, 40% of international businesses in Trade Barometer cite regulatory changes following Brexit as an operational challenge. And amongst businesses that trade in France, for example, 43% regard uncertainty about the future relationship as an operational challenge.
As for those businesses that have already run into problems, negative effects on trade with the EU (34%), problems with hiring staff (26%) and difficulties with staff retention (22%) are the issues most commonly cited. A concern about the potential for increased red tape following Brexit is widespread.
UK businesses still see the EU as an important market
Nevertheless, UK businesses continue to look to their nearest neighbours for new sales. A third of businesses in Trade Barometer (33%) pick the EU out as the market where they most expect to see growth over the next 12 months, ahead of any other region.
In this regard, supporting businesses as they navigate the complexities of Brexit will be crucial in the months ahead. Government clearly has a role to play, in facilitating a shift to a marketplace where the rules of trade are simple and clear. But third parties, including Santander, will also have a vital role to play in helping businesses pursue opportunities in the EU and further afield.
For example, the Trade Barometer findings tells us that 28% of internationally trading businesses face operational challenges in finding trustworthy partners, connections, and customers. Through our team of international specialists and their deep local contacts across multiple international markets we can help businesses find new sales channels and routes to market as well as connecting buyers and sellers directly across markets in both the EU and outside through the Trade Club Alliance.
It is also anticipated that the number of customs declarations post-Brexit will increase annually by 200m. Businesses that have only ever traded in Europe will now need to complete customs documentation for the first time; and understand regulatory requirements such as rules of origin, third country rules, Incoterms and health certification. At Santander we work with an international trade specialist who can provide guidance how business should prepare and train on all the key elements of international trade.
Our Beyond Banking approach will help your business grow all while managing your banking needs through the Santander group or partners banks of the Trade Club Alliance.