Anti-EU rhetoric harms SME export prospects

Friday 30 January 2015

Limited companies, sole traders and contractors who trade abroad may find that trying to build business relationships in Europe could prove to be somewhat of a challenge.

There is the fact that the eurozone has seen slower economic growth in recent times but, also, some small businesses from the UK may be facing extra difficulties when it comes to building relationships with companies in mainland Europe.

This is according to a new survey from the Forum of Private Business (FPB), titled Referendum 210 Report: Preparing for 2015, which found that anti-EU sentiment could be working against businesses.

In turn, this is causing businesses to worry about what might happen if the UK left the European Union. This is a possibility if the Conservative party wins the general election as it promises to have a referendum on this matter.

The FPB report said: "There is a fear that anti-EU rhetoric and the doubt over the UK's future EU membership is already making it hard for some UK businesses in Europe."

Last year, 15 per cent of SME members of FPB said that they were planning to start exporting overseas, however that figure has now dropped to nine per cent. What's more, 58 per cent of firms that were looking into opportunities to trade overseas last year have now decided to focus more attention on domestic customers.

One of the FPB members said that their European customers were unsure about how committed the UK is to the EU.

At present, Europe is the UK's most important trading partner. Figures from the Office for National Statistics shows that around 44.5 per cent of Britain's total trade goes to Europe. Yet, as emerging markets become more popular to trade with, this figure is beginning to fall.

Chief executive of the FPB Phil Orford said: "Europe is the most important market for small business owners but uncertainty over the European recovery, UK membership and poorly introduced regulation is creating unnecessary barriers for Britain’s exporters.

“Our members are detecting that European businesses wanting to form long-term relationships are concerned about these uncertainties and are reluctant to use UK suppliers where they have access to others within Europe offering the same product and service levels.”

The report looked into some other factors about prospects for private businesses for the year ahead. It found that 54 per cent of businesses are choosing to upsell, which is up from 42 per cent last year. What's more, 45 per cent say they wish to increase new products or services, which is up from 42 per cent 12 months ago.

Firms are planning to increase capacity in 2015, with 75 per cent planning to do this, which is up from 71 per cent the year before. The main way that businesses are intending to do this is through better management practices, which is up from 33 per cent recorded just before the start of 2014 to 44 per cent looking ahead to 2015.

Aside from dealing with anti-EU rhetoric, other problems that firms feel that need to be addressed include business rates, with 55 per cent citing this.

By Victoria McDonnell

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