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UK small businesses are failing to go global

  • More than a quarter of small businesses throughout the UK, including Northern Ireland, are not participating in international trade, despite the benefits of internationalisation in the lead-up to Brexit, according to new research. 

    Growing globally, a report from ACCA (the Association of Chartered Certified Accountants) surveyed small and medium sized businesses (SMEs) and accounting practices around the world to identify levels of participation in and appetite for international trade. 

    The report has also found that SMEs in the Republic of Ireland are more optimistic than their UK counterparts where 31% have no intention of trading internationally in the future, compared to 16% in Ireland.

    “Internationalisation can potentially bring a range of growth benefits for both a small business and the broader economy, whilst also driving productivity. This is just one of the reasons that providing the required support for UK small businesses to successfully enter international markets has been such a major priority in Brexit preparations,” explained Ben Baruch, head of SME policy at ACCA. 

    “However, it is clear that more can be done to support UK small business, with more than a quarter not participating at all in international trade, and only two thirds (69%) intending to increase their international trade activities in the coming years – a low percentage compared to other countries like Ireland (84%), Malaysia (77%) and Singapore (76%).”

    Gareth Latimer, Chairman of the ACCA Ulster Panel, commented: “The comparison with the Republic of Ireland is very telling and suggests that the uncertainty over Brexit is deterring small Northern Irish businesses from planning to expand into export markets.  Twice as many SMEs in Northern Ireland and the UK have no plans for international trade compared to the Republic of Ireland. 

    The report identified that the most significant barriers preventing UK SMEs from participating in international trade is knowledge and understanding of foreign regulations (45%) and foreign customs duties/ tariffs (30%). Identifying customers in international markets (26%) and foreign exchange (26%) also represented significant challenges to small businesses.

    “It’s imperative that UK policymakers find ways to address this problem in the coming months if UK businesses are to remain competitive in the global market after we exit the European Union,” added Baruch. 

    “Almost half (46%)  of our small business respondents said that they would benefit from more information and support on international trade, and only 6% said that they intended to access external export finance – perhaps indicating a need to increase awareness around relevant UK Export Finance initiatives. 

    “With less than 9 months to go until March 2019, it is even more imperative that UK business has more certainty and stability around post-Brexit planning. 41% of respondents said that the Government securing improved or new trade agreements would encourage them to participate in international trade.”

    The report also provides some recommendations for small businesses looking to expand their international capability, including embracing cloud technologies, developing the scalability of the finance function, creating a business strategy with global ambitions and identifying where external advice could support internationalisation.

    “Accountants – and particularly small-to-medium sized practices (SMPs). which we focus on in Growing globally – are one of the most useful resources for supporting small businesses across all of these areas,” concluded Baruch.

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