UK businesses bullish over international growth ambitions
HSBC UK’s annual Going Global for Growth Report on international businesses in the UK finds they are significantly more optimistic about their growth prospects over the next 12 months than their domestic only competitors.
The research found 87% of international businesses are looking to grow over the next year, with 33% looking to grow significantly. This compares with 66% of domestic-only businesses, where just 16% of domestic business report looking to grow significantly.
The Report shows size isn’t a factor when it comes to international growth expectations, with 85% of SMEs and 90% of corporates who trade internationally expecting to grow over the next year.
The Going Global for Growth Report survey discovered manufacturing companies are most likely to operate in international markets, with 79% currently doing so. Manufacturing and IT and telecoms are the sectors most likely to be planning further international expansion (70%) – compared to an average across all sectors of 43%. However, IT and telecoms are the most bullish over their future growth plans, with 41% looking to grow significantly – compared to an average of 23% across all sectors.
Among, growth-focused international businesses there is a common digital thread, with 44% saying they are now making more use of digital services to navigate the challenges they are facing, and are reliant on tech for sales and delivery (66%) and for communication and data analysis (63%).
Challenges for 2024
Among businesses who are already operating internationally, the top three challenges to growth they face next year are: the UK economy (35%), the international economic climate (29%), and the cost of doing business overseas (e.g. shipping and freight costs (27%).
Stuart Tait, head of commercial banking at HSBC UK, said: “The dynamism of the UK’s international trade activity is integral to the future health and growth of the domestic economy. We’re seeing more firms in the UK looking to trade internationally because doing so can open up new dimensions of possibility that provide the potential to grow faster and mitigate challenges at home.”
Mainland Europe (85%) is far and away the most popular market to trade with for international businesses who are looking to expand, ahead of North America (63%). However, there are now a significant proportion of firms trading with markets to the East, including ASEAN** (35%), China (34%), and India (28%).
Stuart Tait added: “At HSBC UK we use our global footprint, innovative product solutions and expertise to support businesses with their international growth ambitions. Our on-the-ground presence in more than 50 markets means we are able to deploy our expertise to guide businesses through every step of international expansion, to point them to practical opportunities such as free trade agreements and high-growth markets, and to help tackle financial and logistical challenges.”
Geographic growth expectations
In purely geographic terms, 81% of London based businesses said they are expecting to grow in the coming year, with 30% targeting significant growth. This is higher than Scotland and Wales (78%), the Midlands and East of England, and the North of England (both 75%). The least optimistic region is the South of England, where only 73% of businesses are expecting to grow in 2024.
Gaining a competitive edge
When it comes to what factors would make the UK more competitive for international trade, 48% of businesses in the UK say improved trade deals are the biggest factor, ahead of streamlined regulatory processes (38%), and improved workforce skills (36%).