Half of exporters to EU plan to step up activity despite Brexit

Almost half of SME exporters to the EU are planning to increase sales this year – despite Brexit – although one-in-four say they will reduce or even end exports altogether because of new barriers to trade.

These findings come from a British Chambers of Commerce (BCC) survey, carried out in partnership with moneycorp, completed by more than 1,000 businesses between January 18 and 31. Most were SMEs and more than half of them exporters.

It follows earlier BCC research, released in February, which found that 49% of exporters are facing difficulties adapting to changes in trade with the EU.

The latest findings reveal that:

  • For UK exporters to the EU, 44% plan to increase activity in the EU export market, 27% will consolidate rather than grow, 10% plan to have no activity in the EU, and 13% will decrease activity.
  • Overall, almost two-thirds (60%) of UK firms plan to increase activity in the domestic market. 28% said they will consolidate rather than grow, 2% said they have no plans to be active in the UK market, and 5% will decrease activity
  • One-fifth (21%) of firms say currency risk is more of a concern than two years ago. Manufacturers (28%) are more likely to report concerns.

UK manufacturers (68%) and business-to-business (‘B2B’) service-sector firms (63%) – such as finance, legal, or marketing firms – are more likely to expect to increase domestic activity.

Business to consumer (‘B2C’) firms – such as hospitality, catering, and retail – are less likely to expect to grow in the UK market, with just over half (53%) of these firms planning to increase activity. 30% planned to consolidate rather than grow and just under a tenth (9%) planned to decrease activity.

For all exporters in the survey – those that export to the EU or the rest of the world – 25% said they had concrete plans for growth for non-EU export markets, 27% had intentions to grow, 17% would consolidate rather than grow, 19% had no active plans to be involved in non-EU export markets, and 4% would decrease presence.

When asked if foreign currency risk is more or less of a concern to their business than two years ago, one fifth (21%) said it was more of a concern while only 7% said it was less of a concern, 36% said it was the same as two years ago and 27% said it was neither a concern now nor two years ago.

When asked if they were taking steps to manage currency risk, only 9% were. That percentage increased to 19% for manufacturers.

While 37% of firms that are not managing risk cited little or no currency exposure:

The pound has strengthened by more than 20% against the US dollar since March 2020, and 8% against the euro, damaging the competitiveness of UK exports.

Lee McDarby, Chief Executive of UK International Payments at moneycorp said: “The research is testament to the strength, adaptability and resilience of our UK businesses, now looking to grow, thrive and consolidate in international markets.

“Despite a rapid-fire vaccine roll-out seeing sterling surge in recent weeks, it is safe to say we are not out of the currency volatility woods yet and we expect the road to recovery to be punctuated by sterling’s peaks and troughs.

“The UK is very much open for business, and we have seen positivity, albeit through teething problems, when speaking to our corporate clients. Yet, exposure doesn’t mean unprotected. Risk can be mitigated to increase cashflow and meet crucial overheads when expanding abroad.

“Proactivity is key to keeping your finger on the pulse and we’d urge all UK firms to conduct a full risk assessment and inject dynamism into their hedging strategies to make vital savings.”

BCC Co-Executive Director Hannah Essex said:  “While there are some positive signals, the quarter of exporters that plan to decrease activity in the EU export markets ought to be a strong cause for concern.

“At a time when making Global Britain a reality is so important, government must do more to help exporters expand their business in the EU.

“Giving short-term grants of up to £2,000 per company is welcome, but a much more ambitious approach, using tax credits to defray some of firms’ long-term Brexit costs, is needed. Many businesses trading in Europe say the ending of free movement has added further cost, complexity and confusion when they need to move their people around the EU on business – and more must be done help businesses remain competitive.”

Our Business Beyond Brexit Toolkit continues to be updated regularly with information to help your business adapt to the post-Brexit rules.

© Cumbria Chamber of Commerce