UK businesses looking to export have reported difficulties accessing financing this year, according to a HSBC report into the country’s international trade activity.
The research found that a growing number want to export and firms that are already exporting are “bullish” about the growth prospects of their international business,
Manufacturer expansion
The 'Going Going Global for Growth' report also finds that manufacturing firms are most likely to be already exporting or planning to do so.
Institute of Export & International Trade (IOE&IT) manufacturing lead Paul Brooks says that the inherently international nature of supply chains mean manufacturers can be better insulated from the effects of regional downturns.
“Considering all the shocks they’ve experienced over the last few years, the ones that have been most successful are those with exposure to several different markets.
“It’s unlikely that all your markets will be in a downturn at the same time, or they will at least be in different phases of downturns. It helps spread their risk.”
In all sectors, trading internationally is found to be positively associated with a desire to grow in the next year, with 87% of international businesses reporting growth aims compared to only 66% of domestic-only companies.
‘Creative solutions’
The report also notes that businesses are finding “creative solutions” to cut the cost of trading internationally, with one company cited making savings by sharing a warehouse with other companies. Firms reporting major skills challenges have also dropped by 9%.
Online services have also made trading internationally more affordable for some firms, a contributor perhaps to the increase observed in the number of firms planning to go international for the first time, up by 2%.
Capital challenge
One element holding UK firms back from growing an international business is the availability of capital and financing, with 24% of those businesses who are looking to grow exports or imports stating that they are experiencing difficulties accessing finance.
That’s a 7% rise from last year’s report, which HSBC suggest is down to “current economic uncertainties”.
The explanation, Brooks suggests, may lie with the extended period of comparatively high interest rates seen recently in the UK, making borrowing for growth more expensive.
Though he notes this is “not particularly high historically”, the effort to bring down inflation also makes it more difficult for firms to secure some of the funding they need to grow internationally.
More financial support or tax relief “could persuade at least 13% more to step onto the international stage”, the report contends.
Europe still on top
Europe remains the UK’s “favoured target for market growth”, the report finds, particularly with “export veterans looking to expand”, with whom Europe’s popularity has increased by 7%.
There are opportunities elsewhere, however, with India proving a particularly strong focus.
Among firms looking to grow “significantly”, 27% are focused on India compared to 21% of those looking to grow more generally.
