80% intend to take on new staff in the next 12 months, while almost as many (75%) are planning product development work.
This optimism might seem counter-intuitive in the current business environment, where headwinds such as the uncertainties of Brexit and nervousness about the UK economy persist. But while firms are certainly aware of the downside risks they face, many feel new trading opportunities provide greater upside potential. Nor is this blind optimism: they’ve done much of the groundwork necessary to exploit these opportunities.
Indeed, it is striking that among those businesses with plans to step up their international trade over the next 12 months, the proportion feeling confident or very confident about their prospects increases to 72%.
Focusing on key management challenges
UK businesses are certainly well-placed to benefit from a strong global economy – which is on target for its best year of growth since 2010, according to forecasts from the International Monetary Fund. The relative weakness of sterling has provided some support over the past year, but just as importantly, many firms are conscious of the work required to capture the benefits of this upswing.
In practice, this means businesses are tempering their optimism with pragmatism, focusing on key management challenges rather than simply abandoning any growth plans. 35% say they are conscious of the need to build the right international team, for example, while 32% are thinking about how to maintain their profitability.
Planning during uncertain times
Equally, when it comes to Brexit – potentially a headache for UK businesses trading internationally – 44% have begun planning for the UK’s departure from the European Union, even though there is currently little certainty about what this will mean in practice.
This is not to suggest businesses are complacent about possible threats to their prosperity. 47% fear an economic slowdown in the UK could hit their business over the next 12 months, while Brexit is a concern in this regard for 41%, and 40% worry about higher interest rates.
Confident of growth
Nevertheless, the growth on offer from international trade could be potential compensation for the impact of these domestic difficulties. New revenues from overseas may more than offset any slowdown in the UK.
The Trade Barometer shows that among businesses planning to expand their overseas operations, the numbers confident or very confident of growth over the next three years rises to 72%.
Moreover, it isn’t only businesses planning to expand internationally that will benefit. Santander’s research suggests that even firms that regard themselves as primarily UK-focused have some international exposure. Indeed, the Trade Barometer reveals that a large proportion of businesses who identified themselves as domestic turned out to have international exposure. For example, 24% of supposedly UK-only businesses make overseas sales of their goods and services. Significant numbers of domestic businesses have overseas operations or joint ventures of some form, or exposure to international supply chains. For these businesses too, growing cross-border trade can be an important source of growth in years to come.
Overall, the Santander Trade Barometer suggests the outlook is promising. There will no doubt be bumps along the road, but businesses are optimistic they can continue to deliver sustainable growth.
Read more about the Santander Trade Barometer.
How a Cambridgeshire brewery tapped into Spain
Elgood’s is a family run brewery based in Cambridgeshire that now exports to Spain thanks to Santander.