AN ESTIMATED 1.9 million jobs would be created across the UK and businesses could add a third to their revenue if they were able to make a successful transition to new markets beyond the UK. In Glasgow alone, this could see a potential £735m revenue benefit with an additional 4,300 jobs being created. These figures are released today in a new report from Santander UK entitled “Unleashing UK businesses’ international growth potential“.
The report outlines the potential growth for UK SMEs (small and medium-sized enterprises) through international expansion, and the barriers companies face when looking to take their business or products overseas.
UK companies say the main benefits to international trade are an increase in profits followed by a diversified client base, improved business resilience and an enhanced brand. In separate research, Santander’s Spring Trade Barometer, 59% of companies that trade internationally report an improved performance over the past year compared to just 46% of those which do business solely in the UK. They are also more confident about increased growth, with 78% of these companies optimistic about growth over the next three years, versus 69% of domestic only businesses.
However, it is clear from our research that businesses can be put off expanding internationally by the perceived barriers to doing so. The key areas highlighted by businesses in Glasgow include:
- challenging trade logistics (21%);
- high cost of establishing operations overseas (48%); and
- 20% lack an understanding of the best financial solution available to facilitate expansion, such as the most appropriate available form of credit.
John Carroll, Head of International and Transactional Banking, Santander, said: “The UK is a strong incubator for SMEs, but as our data shows, international expansion is key to unlocking future growth potential for the UK economy.
“We must help to remove the barriers to expansion and support UK companies to take advantage of the benefits of reaching markets outside of the UK. We’ve already assisted over 1,000 UK companies with their global expansion via our network of international specialists, connecting them to distributors, local markets, logistics companies, and many more providers which are now available to even more businesses on our Santander Navigator platform. The opportunity is there but if we are to maintain our status as a leading global economy, there is more to be done to foster international growth.”
Many UK businesses are looking to international trade as a means of economic recovery. The recent Trade Barometer showed that more than a third (38%) perceive international growth as the way out of current UK economic challenges, and 65% believe international markets have greater growth potential than that of the UK. Additionally, 36% say the current economic conditions have made overseas markets more important to their business. Over the past few years, the economic environment in the UK has been difficult to navigate for many businesses with the political uncertainty of Brexit, the impact of Covid-19 and the escalation of the war in Ukraine. As they look ahead and strive for future growth, the main difficulties businesses in Glasgow highlighted in the research include:
- increasing cost of doing business, such as increased energy bills, increased raw materials costs and increased staff wages (45%);
- difficulty in finding adequately skilled staff in the UK (35%);
- difficult UK market trading conditions (30%); and
- impact of customers spending less (28%).
Providing support and guidance to SMEs that are looking to navigate these challenges is key to unlocking the potential for the UK and beyond. When asked what kind of support aspiring businesses in Glasgow would find useful:
- 46% said they would benefit from support with logistics, such as an established choice of providers;
- 29% stated that they would benefit from a forum where they can discuss mutual challenges and opportunities;
- 47% of companies stated that assistance with navigating customs processes is key.
The research also identifies two key areas that Government can support with firstly, a reduction in bureaucracy especially around barriers to trading. Secondly, support with skills and the labour market to ensure companies can take advantage of the potential for growth with people who have the right skills and knowledge to help their businesses.
Santander’s international team has dedicated market specialists that have access to extensive local networks and knowledge around the world, and a long track record of helping businesses implement their international growth strategies. This support ranges from working with them to identify new markets, helping them with shipping and logistics options and organising virtual trade missions to introducing businesses to trusted local partners, potential new customers and vital networks in key destinations.
A year ago, it launched Santander Navigator digital platform to help businesses address the common challenges of expanding internationally. On the platform, Santander supports businesses with trade regulations, recruitment and ‘on the ground’ support as well as offering a community of other businesses looking to operate in similar environments.