Uncertainty around Brexit, tariffs and exchange rates
The British Chambers of Commerce (BCC) and Bibby Financial Services (BFS) have revealed that uncertainty around Brexit, tariffs and exchange rate volatility are holding back the potential of many UK exporters.
The recent survey included 1,140 internationally active UK businesses, and found that general uncertainty around Brexit was considered the top barrier to export, listed by almost half (47%) of businesses, followed by specific concerns around tariffs and exchange rate volatility, listed by 35% and 33% respectively.
Administrative requirements or regulation were considered a barrier by 30% of businesses and the lack of free trade agreements by 23%. Only 7% of internationally active businesses said that they do not face any exporting barriers.
It is not only internationally active UK businesses that being held back from exporting. Among businesses that currently only trade in the UK (338 respondents), just 17% say that they do not face any barriers to export. Therefore, 83% face barriers to reaching their potential.
The lack of clarity around the UK’s future trading environment is clearly taking its toll. General uncertainty around Brexit is considered the top barrier to export by UK-only businesses (listed by 31%) as well.
As a result, amongst businesses currently trading only in the UK, just 7% per cent expect to begin importing or exporting over the next three years.
The research also highlighted the issues that businesses are increasingly facing in relation to stockpiling, payments and the transportation of goods. When asked about business changes experienced over the past 12 months:
- around a third (31%) of businesses reported that they had increased the volume of inventory held;
- 15% reported that it already takes longer to transport goods to and/or from overseas, even before the UK’s exit from the European Union; and
- almost a third (29%) reported that it takes longer to get paid by customers.
Commenting on the results, Dr Adam Marshall, BCC Director General said:
“UK businesses are facing unprecedented levels of uncertainty on multiple trading fronts – and, unsurprisingly, they’re holding back on importing and exporting.
“Just this week, the government finally provided some certainty around tariffs – but, the damage of uncertainty was already done for many firms.
“While international trade always involves an element of risk for businesses, government should be working to lower barriers rather than increasing them. Preventing a messy and disorderly Brexit is the immediate priority, but ensuring continuity of trade with third countries and providing firms with clear and timely information about future trade processes, would go a long way to removing unnecessary obstacles.”
“Chronic uncertainty resulting from Brexit is undoubtedly stifling international trade amongst UK SMEs. Importers and exporters are in limbo, and many are postponing investment decisions, while they await further information. Many others are focusing resources on ensuring they’re prepared to deal with the potential impacts of a no-deal scenario.
“SMEs are telling us that they need clarity over the detail, and it’s imperative that the Government looks to provide this as soon as possible to enable businesses to trade with confidence, both domestically and internationally.”