With the UK about to embark on its first step on the roadmap out of lockdown, the UK is now looking towards the future with more hope. As well as the huge toll the last 12 months have taken on the population, businesses across the country have also faced struggles, compounded by an already-changing landscape due to the UK’s post-Brexit standing in the world.
To understand the impact of both Covid and Brexit on UK businesses, we’ve worked with our partners the British Chambers of Commerce to create a business growth report. This highlighted the challenges that businesses have faced and saw organisations provide an assessment of how they have fared over the last year.
Here are some of the key takeaways from the report:
There are mixed feelings towards the EU and the future
The survey revealed a difference in thinking between UK firms exporting to the UK, with 44% expressing their intention to grow their EU exports over the next 12 months. While this represents almost half of the vote, there is still a considerable 23% of exporters who are looking to reduce their EU activity this year.
This may come as little surprise, with problems having already arisen in the form of red tape and bottlenecks. Indeed, BCC’s own research on the topic showed 49% of exporters are facing difficulties adapting to the new regulations.
As Europe still comes to grips with Brexit, many businesses are now evaluating what the new processes will mean for trade between the UK and the continent.
More eyes are looking to the UK market, and to non-EU trading
While intentions regarding the EU are slightly murkier, over two thirds of the 1,024 UK businesses we asked revealed concrete plans for growth in the UK. The aforementioned red tape of Brexit and uncertainty over the new landscape could be responsible for the drive in businesses to reinforce their domestic ties.
At the same times, almost a third of respondents expressed their intentions for growth in international markets outside the EU. With the completion of Brexit, and the government’s intent to re-launch the country as business hub for the rest of the world, there are a number of opportunities for British firms to trade more efficiently and affordably with countries that were previously unavailable or impractical while the UK was still in the EU.
More firms will be accessing finance in the immediate future
Covid-19 and its lockdown restrictions dealt a hammer blow to the plans and profits of many businesses across the country in 2020. While the government provided a wave of financial support in the form of business rates and VAT relief, as well as the furlough scheme, around 20% of firms we spoke to are still anticipating a reliance on this support in the next 12 months.
This is more of a common theme amongst B2C firms, with approximately half of B2B organisations not intending to access these options. Of those expecting to access finance, most revealed it will be for cash flow, followed by overheads and then for payroll.
Concerns over currency risk are on the rise
The uncertainty of lockdown restrictions and of the UK’s last minute Brexit agreement with the EU created volatility within the currency markets. As such, exchange rates have fluctuated significantly over the course of the last year, affecting the value of payments that businesses need to make and balances that they hold. In our survey, 21% of firms admitted that currency risk is more of a concern for them than it was two years ago.
In addition, less than one out of ten firms actually manage their currency risk (this rises to almost one-in-five for manufacturers), revealing a crucial blind spot for many businesses trading overseas. The reasons provided for neglecting this area included being put off by the costs/fees of FX management, as well as a lack of information available to them about their exposure.
With many UK businesses facing increasing exposure to the volatile currency markets, working with a leading FX specialist as moneycorp can help to shore up finances and protect profits. Our team of dedicated experts are on hand to offer a tailored FX solution that enables your business to navigate the uncertain landscape caused by both Brexit and the pandemic, supporting you in your international trade no matter the scale. Speak with one of our specialists today to find out more.
Notes to editors:
• Fieldwork for this survey was carried out between 18 and 31 January 2021
• The survey received 1,024 responses, with 95% of respondents SMEs (employing fewer than 250 employees)
• 466 respondents said they exported to the EU
• 29% of respondents were in the manufacturing sector; 36% of respondents were B2C service sector firms; 34% of respondents were B2B service sectors firms