A survey has found that more UK businesses are turning to international markets for sales growth, as they grapple with challenging economic conditions domestically and post-Brexit trade barriers. According to Santander UK’s trade barometer, over a quarter of firms who have expanded overseas now anticipate that more than half their revenue will come from abroad in the coming year.
This is more than double the number who said the same two years ago. Additionally, 28 percent of UK businesses are contemplating international expansion in the next three years, marking the highest level in two years of the survey.
The bank surveyed more than 1,000 firms with an annual turnover of at least £1 million. Jane Galvin, head of corporate clients for Santander UK, suggested that the findings point to a “realisation for UK businesses that, actually, in order to achieve growth, they have got to look for international markets and partly that will be because of the economic environment we’re seeing here in the UK”.
Official growth figures indicate that the UK slipped into a recession at the end of last year, amid sluggish growth and interest rates at their highest level for over a decade.
While inflation has dropped sharply over the past year, cost pressures remain a significant threat for businesses, with wage pressures driving up staff costs and higher electricity prices continuing to impact.
Ms Galvin highlighted that Brexit and a surge in regulation are prompting businesses to consider the US and Australia as their “first port of call” for international expansion.
“Bureaucratic challenges are amongst the biggest barriers to international trade for businesses large and small, and there is a clear demand from companies for help to overcome this, so they can drive their international growth ambitions,” Ms Galvin remarked.
The study also revealed that companies are contemplating relocating their supply chains nearer to the UK due to increased geopolitical tensions, disruptions along major trade routes in the Red Sea, and escalating costs.
Some 38 percent of businesses confirmed they have plans underway to shift production closer to home.
