Hard or soft; divisive or united; Brexit is coming – or is it? – but British businesses seem to be ok with the prospect, according to research carried out by Santander.
The Spanish headquartered bank that has significant interests in the UK regularly keeps tabs on the state of British SMEs via its “Trade Barometer”; a research report based on interviews with thousands of business owners who have one thing in common; they possess the “size, scale or ambition to trade internationally or expand beyond the domestic market.”
In the latest update to the report, covering the start of the summer months, Santander says that more than 73% of businesses questioned expect to grow in the next three years – up from a figure of 65% for the previous quarter – and that the most optimistic businesses of all were those that plan to enter overseas markets.
This optimism is in part due, the report says, to a combination of firms ability to find new clients to trade with (51% mentioned this) and an expectation that the economy was improving (40% referred to this).
Inevitably, businesses are wary of the threat Brexit poses: 43% of businesses listed Brexit as a “future risk”, whilst 43% were also concerned about an economic slowdown, and just over 35% saw currency fluctuation as an issue. Yet, despite the chaos, it seems firms are responding proactively to the challenges they may face. Nearly one third of respondents indicated they would look to set up an overseas bank account (up from just over 25% in the last quarter), whilst 28% expect to freeze headcount, or reduce it.
Freezing headcount reflects fears that firms dealing internationally have about geo-political factors affecting their ability to trade successfully: 77% of firms felt these threats could restrict their ability to hire new staff, while 76% say they could hinder expansion into foreign markets.
According to Santander’s data, however, companies that want to trade internationally are more ambitious than any other types of businesses. 90% plan to make new hires, whilst 61% of businesses reported improvements over the past year.
85% of businesses that aspire to do business overseas were confident or very confident of growth, and 85% planned to invest in product development. Santander points out that there are caveats for any businesses planning to do business overseas, suggesting perhaps that businesses can be overconfident about their prospects.
Confidence and enthusiasm have an important part to play in the success of any business, domestic or foreign, but perhaps what’s most important about the data is that it shows that firms are taking the threat of Brexit seriously, and trying to understand the opportunities that a new trading environment will present.
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