Our Spring 2021 edition of Trade Barometer also shows that international businesses are more optimistic about their prospects for recovery and growth in the years ahead than companies focused solely on the British market.
Coping with challenges created by the pandemic
The global pandemic has dominated the economic landscape over the past 12 months. Our latest Trade Barometer shows that, across all businesses, sales are more likely to have fallen since spring 2020 than increased. Nearly half of all companies (49%) report declining turnover versus just 28% which say revenues have increased.
However, there are clear differences in performance between international businesses and those that are purely domestic. 30% of companies that trade on the global stage have managed to boost their sales over the past year against just 24% of UK-only businesses. Notably, the most commonly cited reason given for this improved performance among international companies is ‘new clients outside the UK’ (mentioned by 39% of businesses). Clearly, businesses that have previously managed to diversify into a number of markets have demonstrated a greater ability to grow their business during the pandemic.
As a result, international businesses are significantly more optimistic about the future and what it holds for their business. Two-thirds (67%) expect to grow over the next three years versus 60% of domestic-focused UK businesses.
Brexit and disrupted trade
Although it has dominated the last year, the COVID-19 pandemic is not the only challenge that has faced UK businesses over recent months. The conclusion of Brexit negotiations and the finalisation of a trade agreement between the UK and the European Union (EU) just days ahead of the 31 December 2020 deadline has provided some clarity for businesses that trade with the bloc, after many months of uncertainty.
But Brexit looks set to have a considerable impact on where international businesses operate in the future. For example, just 17% of companies say the UK’s departure from the EU has made it easier to win new business in Europe, against 35% that say it’s now easier to find clients in markets outside of the EU.
The EU remains the main area of operation for UK businesses that trade internationally (81% buy from or sell to the EU at present). However, businesses now see North America as the most likely source of growth over the next three years (cited by 32% of companies versus 31% for the EU).
On a country-by-country basis, respondents identified the greatest growth opportunities as:
- the United States 31%
- China 17%
- Australia also 17%
- Germany 16%, the highest-ranked European market.
Making the most of international opportunities
While it’s encouraging to see businesses looking to international markets to fuel their growth, the pandemic and Brexit have created a number of new challenges with international trade. Almost half of businesses that already trade internationally (47%) say the Brexit deal will make trading more time-consuming and 43% believe it will lead to higher tariffs and/or charges.
This is where businesses will benefit to the greatest extent from expert support that’s tailored to their specific circumstances.
As well as the regulatory and supply chain issues thrown up by Brexit, restrictions on travel have created obstacles as businesses seek to research new overseas markets and establish relationships with new partners such as distributors, legal advisors and customers themselves.
Almost a third (30%) of international businesses say that their inability to attend events such as trade fairs or conferences is an operational challenge, while 31% believe travel restrictions could prevent them from closing deals or connecting with new partners or clients.
How we can help
Clearly, the Government has a role to play in attempting to ease the trading issues around the UK’s departure from the Single Market and Customs Union. But businesses should also be able to rely on support from the private sector, including banks, to make sure they overcome the obstacles they currently face in terms of successfully accessing new markets. Now more than ever, it’s crucial that these businesses are supported to identify new international opportunities and maximise the potential of these opportunities to drive growth.
Santander can help businesses to find new sales channels, routes to markets and connect buyers and sellers from across markets in both the UK and outside, through its global network of partners. These partners are experts in the markets where they operate and can facilitate trade across the end-to-end trade journey, from finding vetted connections, understanding nuances of trade in new markets, as well as practical support around logistics. In addition to this, we can connect businesses to on-the-ground support through our network of international banks, the Trade Club Alliance. We can also support in managing the complex legal, regulatory and compliance requirements due to our expertise, knowledge and collaboration with trade compliance experts.
Overcoming regulatory challenges will be critical to the success of businesses trading internationally. Having the right procedures in place will drive efficiency in the supply chain and free up valuable time to focus on new global opportunities. As we work with a range of international trade specialists, we’re able to offer you a range of solutions aimed at helping to overcome these international regulatory challenges.
- Individual business diagnostics can help in identifying what actions you need to consider to meet your trade compliance requirements.
- Education in the processes needed to meet regulatory standards.
- Help completing customs documentation and facilitating an introduction to a customs agent who can complete and process your documentation.
- Access to a Trade Compliance helpdesk for any questions or concerns.
All these solutions are aimed at helping UK businesses to overcome the regulatory and process-related challenges that they may face when trading internationally, helping them save time, save money and grow their business.
If you need any help please contact us on: email@example.com
For more information, please read the full Trade Barometer report.