Smaller businesses growing less confident about exporting

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Smaller businesses growing less confident about exporting

New figures suggest small business are growing less not more confident about exporting. The numbers doing so are dropping, despite the weak sterling.

That’s according to new research from WorldFirst, and reported over in Business Matters.

‘UK SMEs remain pessimistic about growth for the third straight quarter as continued uncertainty hampers international export confidence’, starts the piece.

‘Continuing the downward trend for 2017, the number of SMEs trading internationally decreased slightly from 30 per cent in Q2 to 28 per cent in Q3.’

1.1 million fewer SMEs

So what does that mean? In real terms.

‘This figure is down by 20 per cent compared to the same period last year, translating in real terms to 1.1 million fewer SMEs trading internationally in 2017’, says Business Matters.

And things don’t look set to change. More, to continue.

‘The gloomy outlook continues into the year-end with 70 per cent of UK SMEs expecting international trade to decline or remain stagnant throughout Q4.’

This isn’t what was necessarily expected. But it does seem a clear signal.

‘Despite expectations that a weaker sterling would boost international exports, SMEs appear increasingly reluctant to pursue overseas opportunities’, concludes the piece.

Value of trade increasing

All of that said, those SMEs which are trading, seem to be doing so quite robustly. Indeed, when you look at the bottom line, trading figures are steady or rising.

‘Despite the decrease in the number of SMEs operating overseas, average trading amounts have remained fairly constant increasing from £44,000 in Q2 to £45,000 in Q3’, reports Business Matters.

What’s more, this figure’s significantly up ‘from the same period in 2016 when the average monthly value of international trade was £38,000’.

A conclusion WorldFirst draw from all this seems to be it may be the small (not medium-sized) businesses who are pulling back, and lower in confidence.

Here’s Jeremy Cook, WorldFirst Chief Economist, quoted by Business Matters.

Smaller business most affected

‘In Q3 the percentage of SMEs trading internationally fell to the lowest level we’ve recorded in nearly two years, whilst average trade values rose.’

And his deduction?

‘This suggests that those SMEs pulling back from international trade are at the smaller end of the spectrum.’

He deems this a pity.

‘This will prove a double edged sword for small businesses’ he’s quoted, ‘who, by holding back on international trade, might be limiting their potential for growth and profitability, narrowing their consumer base and not taking advantage of opportunities that lie beyond the British Isles.’

Hopes misplaced

Things are so uncertain and at times turbulent at the moment. Jeremy Cook, for one, calls into doubt ‘the government’s hopes of a post-Brexit international trade boom with markets far and wide’.

According to the WorldFirst research, he says, these hopes seem ‘either misplaced or that current policy is insufficient to incentivise this behaviour’.

And the Business Matters piece also focuses in on the move in September ‘to raise interest rates for the the first time in more than ten years’.

‘The following trading day’, it says, ‘saw the value of sterling rush higher and SMEs moved quickly to lock in stronger sterling exchange rates through hedging contracts’.

Small businesses are uncertain and worried. That much is clear. And the smaller, perhaps, the more so…

There’s more detail – including around the September move by the Bank of England, and its impact – over in the full piece on Business Matters.

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