With a sizeable minority of exporters expecting a decline in EU trade over the next year, many companies are looking beyond the bloc for new growth, with North America top of the list.
Many manufacturers have been struggling with complex new requirements when trading with the EU since 1 January. According to a survey of over 700 businesses by the Institute of Directors (IoD), 60 per cent of those exporting to the EU are still finding it challenging to adjust to new arrangements, and four in ten ten expect their EU trade to drop over the next year compared with pre-pandemic levels.
Research by Santander suggests that this falling confidence in EU sales is leading many businesses to actively seek opportunities further afield.
Nearly a third (32 per cent) of UK companies taking part in Santander’s Trade Barometer research now view North America as the most likely destination to generate growth for their business over the next three years - just ahead of the EU at 31 per cent.
This is a significant shift to previous surveys, when British businesses were more likely to favour the EU as a growing export destination.
Almost a quarter (23 per cent) of firms also forecast significant growth opportunities in Australia and New Zealand, which have weathered the pandemic more successfully than other markets. A fifth are looking to the Greater China region and Middle East for growth, followed by the Indian subcontinent, Japan and South Korea (all 19 per cent), and Southeast Asia (16 per cent).
Looking at individual countries, the US is seen as by far the most attractive market over the next 12 months, followed by China, Australia, Germany and France.
Meanwhile, the trend of digital transformation during the pandemic is seen as a key tool in the search for new opportunities, with 51 per cent of companies focusing on increasing their trade through e-commerce.
SMEs are among the most likely to be capitalising on this trend. According to separate research by small business platform Xero, 57 per cent of SME owners plan to expand trade to new territories outside the EU and at home after the pandemic with the help of online tools.
More than a third (36 per cent) of those surveyed by Xero said that it is now ‘too expensive’ to sell to European countries due to new import-export charges and trading regulations. Nearly half (44 per cent) are now exploring new overseas markets for the first time.
Donna Torres, Director of Small Business at Xero, said:
“The way small businesses operate on a global scale is transforming and it’s positive to see the impact of Covid and Brexit hasn’t dampened their ambitions. Technology and automated software in particular – like e-commerce platforms – have undoubtedly opened up trade opportunities for small businesses, allowing them to trade both across the UK and further afield.”
Manufacturers’ organisation Make UK has recently published a free step-by-step guide to help SMEs thinking about entering overseas markets for the first time.