Drop in international trade a concern for UK SMEs

Levels of international trading for UK small businesses fell to an all-time low going into the second quarter, new data from World First shows.

The Global Trade Barometer revealed that the average currency transaction in the first three months of 2017 was down 17% from the final quarter of 2016 – a drop from £48,000 to £39,000.

This slowdown in international trading is highlighted as two thirds of SMEs revealed they failed to make a single foreign currency transaction in the first quarter of this year – up from 28% who said likewise in late 2016.

Currency volatility has also impacted many small firms, with 30% suggesting that exchange rate changes had resulted in negative impacts on their business.

Some 22% of those in questioned revealed economic concerns, with 22% saying they have anxiety over what rises in inflation will mean for their business, while a drop in consumer spending is a worry for a similar proportion of SMEs.

Changes in government policy and rising business rates were also listed as concerns by 18% and 16% of SMEs respectively.

Higher import costs and reduced margins have been linked to the reduction in international trade by small firms.

Only a quarter of firms plan to export in the next quarter, compared to one third that currently do and the Barometer notes that’s that declines are expected across all regions of the UK.

Uncertainty surrounding Brexit negotiations has caused concern too, with 26% of firms suggesting it will be more difficult for them to manage their currency risks as a result, with a further 9% very concerned by what could happen next.

Some 35% also believe the negotiations will negatively impact on currency rates, which in turn will cause their businesses to be hit.

A further fall in sterling could damage 37% of businesses, yet despite this, three in five said they have no plans to protect themselves from any additional market volatility.

Should firms have financial fears, contingency planning can help to produce the best outcomes by ensuring that there is always a strategy in place should something unexpected happen.

Corporate advisory services can also provide information on refinancing, restructuring and simplification, alongside advice on how to negate risks that could impact on bottom line finances.

By Phil Smith


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