Economic uncertainty sees small business turn its back on global markets
A “perfect storm” of rising inflation, currency volatility and questions marks around Brexithas created an uncertain environment for the UK’s small exporters in 2017. Now, research finds that as many as 70 per cent are expecting to trade less with global markets in theyear’s final quarter.
According to international payment platform WorldFirst’s Global Trade Baromoter, the number of small businesses trading internationally continued to fall over the course of 2017. In Q3, just 28 per cent of small businesses made a foreign currency transfer per month, compared to just under half during the same period in 2016.
As the UK government begins toidentify future trading partners after the country leaves the EU, the research revealed a trade decline in global markets as well as Western Europe. Although European countries remained the UK’s dominant trading partner, followed by the US, exports fell across every region.
When asked of their outlook in the same report three months ago, business ownerscited rising inflation, falling consumer spending and currency volatility as the greatest threats to their company, with factors such as interest rate increases and government policy contributing to the uncertainty. The latest findings have shown these fears to remain at the fore of owners? minds.
Thetop ten issues Britain’s smallexporters expect to harm their profitability in Q4
Impact in Q4 2017?
Rise in inflation
25 per cent
Remains at 5.5 year high of 3 per cent
Fall in consumer spending
24 per cent
Retail sales fell 0.3 per cent in October
20 per cent
Ongoing since Brexit decision
Change in government policies
18 per cent
Unknown until Autumn Budget and Brexit deal finalised
17 per cent
Increase in interest rates
14 per cent
First rise in a decade, from 0.25 per cent to 0.5 per cent
Increased regulation in the UK
14 per cent
Unknown until Brexit deal finalised
Limited talent/issues with recruitment
13 per cent
First fall in employment since Brexit vote
Increase in business rates
11 per cent
Planned to rise in line with CPI by 3.9 per cent in April 2018
Increased consumer debt
11 per cent
Annual rate of growth of 10 per cent
Commenting on the findings, Jeremy Cook, chief economist at WorldFirst, suggested that UK exporting’s newest entrants were most likely to suffer from the increased costs of doing business and political uncertainty.
in Q3, the percentage of SMEs trading internationally fell to 28 per cent, the lowest weve recorded in nearly two years. However, average trade values rose, suggesting that the SMEs that are ceasing international trade are those at the smaller end of the scale, Cook said.
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.