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UK Trade in the face of Brexit

With Brexit less than a year away, and counting, uncertainty still remains as to what it will mean for UK business, particularly in relation to international trade. While the UK government is certainly banging the drum to drive exports, the task remains firmly in the hands of UK business to drive growth and success outside the single market. None more so than for small business.

 

By defining its own future and capitalising on change without waiting for the political process to complete, UK business has the opportunity to achieve future success as it targets new markets globally and beyond Europe. True change and true success will be driven by the innovation required to overcome the disruption caused by recent geopolitical events and the positive outlook that UK business is adopting as it approaches such a defining moment speaks volumes for the future.

 

The UK Government certainly has an important and ongoing role to play and recent examples from its agencies highlight the efforts being made in parallel to Brexit. Notably, UK Export Finance (UKEF) has doubled its capacity to trade with Singapore (up to GBP£4.5Bn) for both UK business exporting to Singapore and Singapore business importing from the UK. This support is becoming increasingly important given the positive sentiment being attributed to, and forecast appreciation of, the Sterling by Singapore business as seen in recent East & Partners (East) currency research.

 

This currency research also provides an indication of UK business’ trade planning in its search for replacement markets. UK importers and exporters forecast high growth in their use of currencies other than the USD and EUR and have forecast a reduction in their use of the EUR over the coming months.

 

Also of critical importance here is the difference in forecasts between business size; 100 percent of micro businesses and SMEs are looking to use currencies outside the USD and EUR, a big contrast to the Corporate market where the figure is only 50 percent.

 

Facilitating this trade and growth is essential as the need for cross border payments and international trade finance solutions increases across all segments. East’s latest trade finance research clearly shows the difference in primary providers between the lower and top end of town. International providers, with their global footprint and knowledge of international markets, focus their business on larger corporate segments while Micro businesses and SMEs are mainly served in a holistic manner by domestic providers who are less able to facilitate growth and business development in international markets.

This disparity between small business’ focus on international growth outside the EU and the challenges and constraints faced by their current domestic providers in facilitating that growth offers an opportunity for international banks and disruptive / innovative non-bank providers. By partnering with smaller business and potentially working hand in hand with Government agencies to help meet risk profile requirements, international and non-bank providers can deliver access to solutions that benefit UK business as a whole. This needs urgency to ensure success, as UK business is already well underway in exploring these new trade opportunities and such support can only increase its chances to win.

 

The changing nature of UK business’ trade strategy is evident as it throws off the complacency of decades of relatively easy, free trade with Europe, despite what some saw as the burden of EU bureaucracy and regulations. The questions this raises, however, is how do financial providers execute the tactical requirements necessary to capture the opportunity on offer, implement the required solutions and facilitate UK business’ re-emergence as a global trading power?  
We’d welcome your thoughts on how providers can best facilitate British business’ export growth post Brexit, get in touch with us here