More than half of UK businesses look to EU for growth, HSBC report finds

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Tuesday, November 15, 2022 12:02 AM

More than half of UK businesses are looking to the European Union to navigate the economic turmoil.

A groundbreaking survey by HSBC UK has found that 53% of businesses are targeting trade with the continent despite post-Brexit rules and renewed bureaucracy in Brussels.

Surveying 2,000 companies in one of the banking giant’s largest and most comprehensive reports, its Going Global for Growth study describes how companies are looking to trade to continue growing amid major economic challenges.

It comes as many UK businesses face pressure from the cost of living crisis, with supply and demand hit by rising inflation, borrowing rates and stagnant wages.

According to the study, the main driver for turning to the EU was an existing business relationship and close physical proximity, with the attraction of having access to a huge market of around 450 million people.

The report also highlights that UK businesses are looking to North American and South East Asian markets, 37% and 35% respectively, in addition to the Middle East and North Africa, at 34%. .

Ahead of Thursday’s budget, with inflation at 10.1% and a series of tax cuts and increases expected, businesses were unsettled by a series of global and domestic challenges.

Some consider geopolitical risks (48%) to be a major obstacle, following the ongoing war in Ukraine which has destabilized markets and inflated the price of oil and gas in Europe in particular.

Global trade is a key driver for 53% of future business growth prospects, with 8% of businesses, or 448,000 in the UK, wanting to start trading across borders.

Yet nearly two-fifths of those considering international expansion were put off by the costs of doing business, and 30% worried about labor shortages, supply chain issues and logistical issues.

With so many economic challenges at stake and on the horizon, around a third of companies have sought to protect themselves from risk. 31% were more selective with customers and one in five retired products that were no longer viable.

HSBC UK research also found that over 40% of businesses are turning to digital options, so they can try the market without fully committing.

Businesses are “adapting by embracing greater international diversification,” said Cora McLaren, managing director and g=head of the international banking subsidiary at HSBC UK. “Not only does this provide important protection for businesses, but it also creates opportunities.

“Our research shows how UK businesses are prioritizing international trade as an integral part of their growth”, with the majority opting for the EU.

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