Nearly a quarter (23%) of UK exporters to the EU have said they plan on reducing or eliminating their activity in the bloc in the next 12 months, following the ratification of the UK-EU Trade and Co-operation Agreement.
That's according to results from the latest British Chambers of Commerce (BCC) survey, in partnership with Moneycorp.
Meanwhile, 44% UK to EU exporters said they plan to increase activity in the market and 27% will consolidate rather than grow. A further 10% plan to have no activity in the EU, and 13% will decrease activity.
Fieldwork for the survey, which received 1,024 responses from UK firms overall, 466 of whom were exporters to the EU, was undertaken between 18 and 31 January 2021.
Overall it found, six in 10 UK firms plan to increase activity in the domestic market. 28% said they will consolidate rather than grow, 2% said they have no plans to be active in the UK market, and 5% will decrease activity.
Among these, UK manufacturers (68%) and business-to-business (‘B2B’) service sectors firms (63%) – such as finance, legal, or marketing firms – are more likely to expect to increase domestic activity.
Under half (44%) of current UK exporters to the EU either have concrete plans for growth or intend to grow without concrete plans. 27% will consolidate rather than grow.
By contrast, nearly a quarter (23%) of UK exporters to the EU either have no plans for activity in the EU export market (10%) or plan to decrease their activity in the EU export market (13%) over the next twelve months.
This follows BCC research released on 11 February which found that 49% of exporters are facing difficulties adapting to changes in the trade of goods with the EU.
One-fifth (21%) of firms say currency risk is more of a concern than two years ago. Manufacturers (28%) are more likely to report concerns.
Commenting on the management of currency risk, Lee McDarby, CEO of UK International Payments at Moneycorp said: “The research released today is testament to the strength, adaptability and resilience of our UK businesses, now looking to grow, thrive and consolidate in new and exciting international markets.
“Despite a rapid-fire vaccine roll-out seeing GBP surge in recent weeks, it is safe to say we are not out of the currency volatility woods yet and we expect the road to recovery to be punctuated by GBP’s peaks and troughs."
When asked whether businesses were taking steps to manage currency risk, overall only 9% of respondents were. However, that percentage increased to 19% for manufacturers.
According to research by Moneycorp, many UK firms intend to consolidate or grow in non-UK export markets, yet sterling volatility remains high.
With the pound strengthening by over 20% over against the dollar since March 2020, and 8% against the euro, meaning that if businesses were exchanging £100,000, this would be a difference of $25,000 and €9,000 respectively.
BCC co-executive director, Hannah Essex, said: “At a time when making Global Britain a reality is so important, government must do more to help exporters expand their business in the EU.
“Giving short-term grants of up to £2,000 per company is welcome, but a much more ambitious approach, using tax credits to defray some of firms’ long-term Brexit costs, is needed."
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