Against a backdrop of falling exports to non-European markets, UK firms are experiencing stronger growth on the domestic front.
New findings from Western Union Business Solutions shows that British small and medium-sized businesses (SMEs) are experiencing a domestic-led recovery.
The company’s International Trade Monitor, which profiled 650 businesses undergoing international trade, shows that export activity outside of Europe is failing to recover from the dip recorded in the latter half of 2013.
However, some 40 per cent expect trade with the Eurozone to increase in the coming six months – a figure which is the highest ever noted.
Looking at overseas markets that have dropped off, SMEs with customers in China dropped from 15 per cent a year go to nine per cent now. India declined from 14 per cent to six per cent while Asian markets fell by 10 per cent to 17 per cent.
Christina Hamilton, UK managing director of Western Union Business Solutions, comments, ‘These results are an important confirmation of the domestic recovery and are a welcome sign that improving conditions are beginning to extend from big corporations to SMEs.
‘Whilst improving domestic and European demand is welcome, there is a danger that the economic recovery will remain unbalanced. The risk is that businesses will return to old habits and rely too much on local customers at the expense of exporting to high-growth markets.’
More on business confidence:
- Business confidence peaks for SMEs
- Investment intentions reach highest level for 19 years
- Fear of risk turning of European entrepreneurs
Hamilton believes that UK sterling strength hurts the international competitiveness of UK SMEs, and that continued appreciation has the potential to ‘derail hopes of a more export-led recovery.’
The report also reports that the top five SME concerns are the health of the economy (72 per cent), cheaper competitors (63 per cent), customer loss (57 per cent), currency volatility (54 per cent) and Eurozone instability (52 per cent).
On the domestic front SMEs believe the going is much healthier, with rises recorded in each quarter since the first three months of 2013.
Some 57 per cent say that the UK economy has improved in the last six months, compared to a figure of 9 per cent year ago.