- Over a third of businesses have made no plans for Brexit, rising to 54% among businesses trading solely in the UK
- In response to Brexit, 46% of businesses are planning to reduce costs and a third to reduce headcount and increase prices. A fifth of businesses plan zero investment in the year ahead
- Four in ten businesses plan to increase trade with countries outside the EU – with the US, China and Australia topping businesses’ wish list for trade deals
Over a third (35%) of businesses have made no plans for Brexit with just weeks to go before the UK is due to leave the European Union, while those that have made plans expect to sharply scale back investment and increase prices, according to the latest Santander Trade Barometer research1.
To mitigate the anticipated impact of Brexit on the economy, 46% of businesses are planning to reduce costs and 33% to reduce headcount. Nearly a quarter of businesses (23%) are considering moving some business functions overseas and one in ten (13%) considering relocating their business entirely. A third (33%) of businesses plan to increase prices, rising to 57% for retail and wholesale businesses.
John Carroll, Head of International & Transactional Banking, Santander UK said: “It’s concerning that with just weeks to go, so many businesses still have no Brexit plans in place, even though two thirds of businesses say it is already impacting them. Brexit could have implications for companies of all sizes, regardless of whether they currently trade internationally, so it’s crucial that every business considers what it may mean for them.”
Brexit is seen as a threat to growth over the next 12 months by nearly two thirds (61%) of businesses and a similar number (63%) say Brexit has already had a negative effect on their business - impacting trade with EU countries (51%), supply chains (43%) and ability to hire new staff (24%).
Businesses are also continuing to scale back investment plans, with more than a quarter of business (27%) planning zero investment in the year ahead. Only 47% plan to hire new staff compared to 81% a year ago.
UK business confidence has fallen to the lowest level since the Santander Trade Barometer began three years ago, driven by concern about prospects for the UK economy and Brexit uncertainty. Just 22% of businesses are very confident of growth over the next three years, while 19% say they are pessimistic or very pessimistic about their growth. Businesses which trade internationally remain more confident than solely domestic businesses.
As part of their response to Brexit, 37% of businesses are planning plan to increase trade with non-EU countries. The US, China and Australia top businesses’ list of most desired post-Brexit trade deals and are seen as the countries with the most growth potential over the next year, with 30% of businesses identifying the US as the market most likely to generate the best growth over the next three years.
John Carroll added: “For businesses with little or no experience of trading internationally, expanding into overseas markets can understandably be a daunting process so it’s encouraging to see more and more businesses are looking to seize exciting trade opportunities with non-EU countries like the US and China. We know it’s not easy, but those bold enough to look at new overseas markets can bolster their growth and at the same time protect against uncertainty at home. Santander has already helped over 500 businesses to realise overseas expansion opportunities and we’ll continue to do so this year with over 90 virtual and physical trade missions.”
Businesses biggest concerns about trading internationally in most regions of the world are bureaucracy, the need to find local partners and market access. Santander’s international team has access to extensive local networks and knowledge around the world, and a long track record of helping businesses implement their international trade plans. This support ranges from working with businesses to identify new markets and organising trade missions to promising new locations, to introducing businesses to local partners, potential new customers and vital networks in key destinations. For more information on the international support available, visit www.santandercb.co.uk/international.
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Notes to Editors
1) Research was undertaken by YouGov with 1,005 UK businesses with a minimum turnover of £1m between 31 July 2019 and 14 August 2019.
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