Britain’s small exporters are experiencing the biggest sales uplift for three years, according to new findings, as confidence among the wider small business community plummets amid political and economic uncertainty.
For its latest quarterly Small Business Index (SBI), the Federation of Small Businesses (FSB) measured the outlook of UK entrepreneurs to produce an assessment of confidence for future trading.
Almost four in ten small exporters reported an uplift in overseas sales in the past three months – the highest proportion since 2014 – and over a third are expecting business to improve further for the remainder of 2017.
In comparison, the net balance of small business owners as a whole reporting higher revenues hit a four-year low (2.6 per cent).
The survey results indicate that exporters have taken advantage of the pound’s depreciation against the US dollar and the Euro to offer goods at competitive rates to overseas markets.
Recent research from payment platform WorldFirst suggested Britain’s legion of small international traders has reached 1.5m in number, with exporters contributing a total of £78bn to the economy every month.
Commenting on the apparent strength of UK exports, Mike Cherry, FSB national chairman, said the “bullish” outlook of international traders was encouraging.
“While growth falters here in the UK, it’s accelerating across the Eurozone and US,” he added.
Despite the current optimism of small exporters, Cherry urged policy makers to keep their eye on the ball and secure a stable trading environment once Britain leaves the EU in March 2019.
“The right Brexit deal, including a transition period of at least three years, and a comprehensive Free Trade Agreement, will be critical to ensuring small firms can access key overseas markets,” he added.
“Bringing forward measures to improve exporting, such as tax credits and export vouchers, would encourage more businesses to seek international opportunities.”
With small exporters seemingly benefitting from the impact of Brexit, business optimism as whole fell to its lowest level since the EU referendum in June 2016.
The SBI for Q3 stood plummeted to +1 from the +15 registered in Q2, sitting close to the -3 produced immediately after the Brexit vote.
Some 70 per cent of respondents reported a rise operating costs from the same period in 2016, with labour costs (42 per cent), tax burdens (21 per cent) and rent (19 per cent) the most commonly cited factors driving up overheads.
Cherry added: “Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among small firms and consumers alike. With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism.
The tough trading environment for small firms saw a record number of owners expecting to downsize, sell their business or cease trading. At one in eight, it is the highest figure since the SBI began in 2012.
“Small firms will be looking to the Chancellor to extend a lifeline at the Budget. In such a difficult trading environment, any new tax grabs or loss of reliefs for entrepreneurs would exacerbate existing challenges.”
The most lucrative markets for small UK exporters
Sign up to our newsletter to get the latest from Business Advice.