Latest research from Western Union Business Solutions released today following survey of 1,000 plus UK-based small and medium-sized enterprises
- A third
remains the largest export market for UK SMEs;
- One in three businesses check the currency markets regularly, but a tenth of businesses don’t know what to do with unforeseen FX costs
Union Business Solutions, a leader in global payment services, today announces
the latest research-based findings of the Western Union Business Solutions
International Trade Monitor (ITM), the quarterly economic confidence survey of
reveals that 83% of SMEs said they felt confident about the
findings show that UK SMEs are likely to increase their international activity
in the coming year, with the average number of countries that British
businesses typically trade with rising from 2.1 to 2.3 countries over the last
two quarters. In addition, nearly half
of respondents (47%) say they have increased the number of countries they do
business with in the last 12 months.
This growing trend looks set to continue into 2015, with more than a
third (34%) of
International Trade Monitor also demonstrates the importance that UK-based SMEs
place on export markets for their business. A quarter (24%) of UK SME business
revenue comes from exports, far more than that of other Western economies, such
Of the SMEs surveyed, 43% expect exports to account for a greater revenue proportion in the next year, up from 40% the previous quarter.
Half of the SME business owners anticipate export trade to be driven by mature northern hemisphere markets (51%), whilst a third of respondents (30%) expect export demand to be driven by emerging markets and the BRIC nations.
remains the largest export market for UK SMEs, with 80% exporting to the
Continent, an increase from 66% 18 months ago (Q3 2013); demonstrating that
British businesses have successfully strengthened their trade relationships
with European counterparts. Significantly,
Given the rapid decline of the Rouble in recent months, it is unsurprising that Russia’s attraction has an export market has fallen dramatically in recent months – just 4.4% of businesses are exporting to Russia this quarter, compared to 22% in the second quarter of 2014.
Crivelli, managing director, Europe at Western Union Business Solutions, said:
“This research highlights the
“It is encouraging to see that, for the second quarter in a row, over a third of SMEs have seen business revenues increase as a result of their international trade activity, with many anticipating further growth in this space in the coming months.
to the International Trade Monitor, one in three
Tony said: “Having an understanding of foreign exchange markets is crucial for the success of any business that sends or receives money internationally.
to businesses based in the
“Unforeseen foreign exchange costs can harm the profitability of importers and exporters. Businesses that trade internationally should consider implementing risk management strategies and currency hedging tools in order to manage revenue streams and remain resilient in an increasingly competitive market.”
Trade Monitor paints a worrying picture of challenges faced by
- Cheaper competitors represents the second biggest concern for 62% of SMEs
- Cash flow is an increasing concern for British SMEs, rising to 58% from 55% the previous quarter. Late payments and debt recovery was also a concern for 58% of respondents.
- Currency volatility (52%), was the next biggest concern
In addition to these concerns, UK SMEs are finding it more expensive to operate. 44% of businesses say that their costs have increased by an average of 5.4% over the last year. By contrast, just 9% of UK SMEs say that costs have fallen.
Furthermore, intentions to add to headcount appear to be tapering. Less than a third (33%) of businesses plan to recruit more staff in the next six months, down from 38% the previous quarter. Worryingly, one in ten businesses (10%) plan to reduce staff numbers, by an average of 9%.
In a move aimed at combatting increasing costs whilst remaining internationally competitive, almost two fifths (39%) of businesses plan to lower their prices in the next 12 months, by an average of 7%.
The key points of the International Trade Monitor are summarised below:
- 42% say international trade will improve in the next 6-12 months
- 87% are confident about current international trade conditions generally
- 83% have
confidence in the
- 96% say the domestic economy has improved or stayed the same in the past 12 months, compared to 93% the previous quarter.
- Nine out of 10 businesses (89%) are either very confident or confident in the sustainability of this domestic improvement. Just 4% are not confident.