UK companies are increasingly turning to international markets to boost their sales amid challenging domestic economic conditions and post-Brexit trade hurdles, a survey reveals.
Santander UK's research shows that over a quarter of firms expanding overseas now anticipate that more than half of their revenue will come from foreign markets in the coming year, a significant leap from two years prior. Additionally, 28% of UK businesses are contemplating global expansion within the next three years, marking the highest interest recorded by the survey in two years.
The bank's survey included responses from over 1,000 firms each boasting an annual turnover of at least £1million. Jane Galvin, Santander UK's head of corporate clients, commented on the results, stating that there is a "realisation for UK businesses that, actually, in order to achieve growth, they have got to look for international markets and partly that will be because of the economic environment we're seeing here in the UK".
Official growth figures indicate that the UK entered a recession towards the end of last year, with sluggish growth and interest rates reaching their highest point in over a decade. Although inflation has seen a sharp decrease over the past year, businesses continue to face significant cost pressures, including rising staff expenses due to wage demands and persistently high electricity prices.
Ms Galvin pointed out that Brexit and a surge in regulation are likely pushing businesses to consider the US and Australia as their "first port of call" for international expansion. A significant portion, over one third of companies, expressed a desire for more government assistance in cutting down regulatory hurdles and red tape abroad.
"Bureaucratic challenges are amongst the biggest barriers to international trade for businesses large and small, and there is a clear demand from companies for help to overcome this, so they can drive their international growth ambitions," Ms Galvin remarked.
The study also revealed that due to rising geopolitical tensions, disruptions along major trade routes like the Red Sea, and escalating costs, firms are contemplating relocating their supply chains closer to the UK. Around 38% of businesses reported having plans in place to shift production nearer to home.