Global Britain? Businesses look for growth from domestic markets for next 12 months, finds survey
UK owner-managed businesses have an increasingly global outlook but will look for greatest growth from domestic markets over the next year, reports a survey from accountants, business and financial advisers Kreston Reeves.
The survey of 615 directors and owners of businesses with a turnover of between £1 million and £50 million finds:
- 81% of businesses currently export or trade overseas.
- Of the 19% that do not trade internationally, 38% are actively planning to do so and 43% are likely to consider expanding into overseas markets in the next three years.
- 84% of businesses surveyed will, however, focus growth plans on domestic markets over international markets in the next 12 months.
- 61% of businesses report international trade levels returning to pre-pandemic levels.
- 63% of businesses have cancelled or delayed international expansion because of the COVID pandemic, Brexit or supply chain issues.
- Europe is the most important overseas market for 71% of businesses that trade internationally.
- 36% of businesses turn to their trade body and 33% to their accountant as their preferred sources of advice on international trade.
Andrew Griggs, Senior Partner and Head of International at Kreston Reeves, said: “UK businesses continue to face significant challenges to international trade. The impact of the new trading arrangements with the European Union, the COVID pandemic and conflict in Ukraine will continue to hamper international trade for many months to come.
“Yet there are refreshing views from UK businesses despite all the challenges. Businesses are increasingly international and global in their outlook and expect to see significant revenues from global markets over the next three years. But for the next 12 months, businesses are focusing on domestic markets which was surprising considering the UK is heading towards a recession.”
Kreston Reeves first conducted an international trade survey in 2019 where businesses faced greater uncertainty over the shape of the UK’s trading relationship with the EU. Then, 58% saw the EU as a priority market for growth; today 71% of business leaders see it as a priority market. Brexit has not dimmed the appetite of UK businesses for a close trading relationship with our closest neighbours.
The Kreston Reeves survey also reports increased barriers to international trade over the past three years. Tax primarily VAT and duties, tariffs and trade barriers and the increased cost of trading internationally are considered greater barriers today than three years ago and are, arguably, a result of government policy.
Andrew adds: “Our survey asked business leaders what would best help them increase levels of international trade. The single greatest measure for over a third (35%) of businesses would be free trade agreements, closely followed by tax breaks (34%), the removal of red tape (32%) and then financial incentives (31%).
“The complexities of international trade see businesses seek advice from many quarters. Professional bodies are the primary source of advice for 38% of businesses, closely followed by their accountant (33%).
“It is, of course, a combination of support and advice that would truly help businesses grow overseas.”
“Although UK businesses are increasingly global in their outlook, they are still focusing growth plans on domestic markets. The continuous economic challenges cannot be ignored. The Government should actively look for ways to support businesses with their overseas ambitions. That could easily be achieved by removing the red tape and barriers to international that have arisen following Brexit.”