UK businesses looking to international markets for post-Covid bounce
UK businesses are planning for increased international trade over the next 12 months looking for a post-Covid bounce, finds new research commissioned by Kreston International, a global network of independent accountancy firms.
The research, conducted in May amongst 514 SMEs across the UK and published in a report Trading internationally in 2020 – a post Covid-19 perspective, found that whilst 55% of businesses have cancelled or delayed plans to export to overseas markets or trade internationally as a result of the COVID-19 pandemic, 51% say their view on the importance of international trade has increased.
45% of businesses surveyed expect international trade to return within 12 months, suggesting they are expecting a V-shaped economic recovery. 40% of those surveyed also expect to see increased levels of import trade.
Kreston is a global network of 200 accountancy firms across 110 countries employing more than 23,000 people. The survey was commissioned by five UK Kreston member firms: BHP, Bishop Fleming, Duncan & Toplis, James Cowper Kreston and Kreston Reeves.
Headline findings:
- 71% of businesses in this survey told us that pre Covid-19 they were trading internationally.
- 55% of businesses have delayed or cancelled plans to trade overseas as a result of Covid-19.
- 51% of business leaders say their view on the importance of exporting has increased in a post Covid-19 world.
- 40% of business leaders surveyed expect to see import trade increase.
- 45% of business leaders expect international trade to return within 12 months, suggesting they are expecting a V-shaped recovery.
- Of those businesses that were not trading internationally before the outbreak of Covid-19, 34% say they are likely or very likely to expand internationally in the next three years.
- 39% of business leaders believe Covid-19 will provide opportunities for their business.
Andrew Griggs, a board member of Kreston International and senior partner at Kreston Reeves said: “Our research has shown that UK businesses are outward-looking, generating considerable revenues from international markets. Covid-19 has, unsurprisingly, placed businesses under varying degrees of stress and temporarily halted much international trade – 80% of businesses told us that they are under a little or a lot of stress, and that 55% of them have delayed or cancelled plans to explore export markets or trade internationally as a result.
“But the research presents a much more positive picture. Over half (51%) of those businesses surveyed say that their view on the importance of international trade has increased in a post-Covid world, and that 40% expect to see import trade increase.
“What is particularly encouraging is that 45% of businesses surveyed expect international trade to return within 12 months, suggesting the much hoped for v-shaped recovery.”
In November and December 2019, Kreston surveyed 1,109 small and medium-sized businesses for their views on the reputation of the UK internationally and barriers to international trade as the UK looked to officially depart the European Union.
That survey found 52% of businesses believed the UK’s reputation on the international business stage had improved in the last 3 years, with 70% of businesses saying that it is the skills and expertise of entrepreneurs and businesses that drives our reputation. 79% of businesses surveyed in late 2019 believe that it is the actions of politicians and policy that threaten our international reputation.
Liza Robbins, CEO of Kreston International adds: “The first survey was due to be published in March this year but was delayed because of Covid-19. Yet as the UK looks to agree a trading agreement with the EU, its findings are still important and relevant.
“Our research found that the biggest concerns for businesses trading internationally are tax, VAT and duties (23%), currency fluctuations (20%), and tariffs and trade barriers (19%). Red tape (18%), the cost of international trade (18%), logistics (17%), and getting paid (14%) are all very real barriers to international growth. As we look to redefine our position on the world stage these remain live issues.
“We asked businesses what help they would most value when trading internationally, and, reflecting the complexity of international growth, there is no one single measure that would help more than others.
“Businesses told us that free trade deals (32%) would be the most helpful but would also want to see tax breaks (26%), financial incentives (25%), partnering opportunities (25%), less red tape (23%) and help in identifying customers (21%). A package of support is quite clearly required to help British SMEs take on the world.”
Businesses looking to trade internationally turn to many different sources of information for advice including professional or trade body (41%), Department for International Trade (39%), accountants or financial advisers (32%) and local chambers of commerce (31%).
Andrew Griggs adds: “Brexit has changed the face of international trade for UK businesses, and that will bring both challenges and opportunities. We are encouraged by the outward face of SMEs, but government, professional and trade bodies, and their advisers, all need to play a greater role in helping secure the long-term international future of British business.”