Covid is no deterrent for international trade ambitions
Almost three-fifths (59%) of UK businesses are confident that they will see growth in the next three years, despite the difficulties they are experiencing due to the coronavirus pandemic, according to the latest Santander Trade Barometer published today. The data ranks business confidence higher now than this time last year.
Businesses aspiring to internationalise are especially optimistic, with the number of domestic-only companies considering international expansion in the next three years, rising to its highest level (17%) since the barometer began in 2017. The US secured the top spot on business’ new trade deal wish list, with 36% of UK them looking for a transatlantic deal, followed by Australia (23%), China (22%) and the CPTPP2 (22%).
John Carroll, head of international & transactional banking, Santander UK said: “While Covid-19 has clearly had a devastating impact on many businesses, it is encouraging to see they remain largely optimistic about growth prospects over the medium term. For those quick to respond, to embrace digital transformation and to introduce new products and solutions, there is hope. UK businesses which trade internationally can be more resilient in the face of the domestic slowdown, increasing their chance of survival during this challenging time. Although there are many issues to grapple with, a hunger to survive and thrive is evident and we believe that international trade opportunities can play an important role in helping UK businesses to get back to growth.”
Brexit and International opportunities
In order to be able to trade with ease, the trade deals the UK negotiates are crucial as regulatory (40%) and post-Brexit bureaucracy (40%) concerns top their list of challenges to international trade. The first post-Brexit trade deal with Japan was announced last month, which according to the Barometer was ranked twelfth by respondents as a market that offered significant growth opportunities.
Despite falling to third in terms of negative impact, behind Covid-19 and a UK economic slowdown, Brexit is still a worry for 55% of businesses. Regardless of this, trading with the EU remains incredibly important for UK firms and it is where they see the most potential growth over the next 12 months (33%) followed closely by North America (30%).
Covid-19 impact and business adaptation
Despite the positive outlook for longer term growth, almost 9 out of 10 companies (89%) reported that the pandemic had already caused a downturn in their activity so far this year. Four out of ten businesses (41%) expect a lack of customer demand to impact them, and almost a third to experience supply chain disruption (32%) in the next twelve months. 41% of are planning to stop or pause hiring in the UK and 28% are stopping their UK investment plans as a direct result of the pandemic.
But businesses also see reason for optimism, with a quarter planning to adapt their operations by varying their products (24%), introducing new partners and suppliers (21%) or looking to expand into new sectors (18%). The coronavirus pandemic has presented opportunities for nimble companies that are quick to adopt a more digital approach, with a third (33%) reporting new opportunities from digital technologies, products and solutions and over half of those (57%) switching their sales channel to an ecommerce platform.
Business’ biggest concerns about trading internationally in most regions of the world are bureaucracy, the need to find local partners and market access, while 28% or respondents were concerned about missed opportunities due to cancellations of international conferences and events. Santander’s international team has dedicated market specialists that have access to extensive local networks and knowledge around the world, and a long track record of helping businesses implement their international growth strategies. This support ranges from working with them to identify new markets and organising virtual trade missions to introduce businesses to trusted local partners, potential new customers and vital networks in key destinations. For more information on the international support available, visit www.santandercb.co.uk/international.
