Battered but unbowed by the pandemic, UK business is finding infinitely creative ways to recover lost ground. And I know from conversations with business leaders that many have their sights set beyond the domestic market.
Whether it’s done to capture a targeted customer base, or simply as an opportunistic response to enquiries from abroad, overseas trade is always a key route to growth. Recovery strategies simply add an extra motivation.
Opportunity is still rife on our closest continent – and will remain so after the Brexit transition period. At HSBC we continue to work on your behalf to help you achieve your EU trading ambitions.
Not an end, but a fresh start
The Brexit negotiations continue. As I write, there is still every hope of a deal being struck. Whatever the outcome, however, growth-hungry businesses will look for ways to see this moment not as the closing of a door, but as a threshold to new opportunities.
What will not change in January 2021 is the presence of a huge trading bloc on our doorstep. Like every world economy, the EU has been damaged by covid-19. But containment has been more successful than in the Americas, raising hopes of a relatively steady recovery.
Eastern Europe may offer even greater gains. Territories such as Poland, Lithuania and Slovenia were growing faster than their western peers before the pandemic, and should not be overlooked because they are less familiar markets.
A new tariff regime
The changing trade landscape could make this the right time to review production and supply chain arrangements, as well as markets.
The government’s new UK Global Tariff , published in May, will replace EU tariffs from January and will apply to any goods imported into the UK from countries with which we do not have a Free Trade Agreement in place.
It set tariffs at zero for the import of many materials and components, from dishwashers and freezers to LED lamps and bike inner tubes. The new system could mean there is merit in exploring other overseas markets as sources for the import of goods and raw materials.
Getting supplies from domestic sources could become more attractive too. According to research by HSBC and MAKE UK, over a third of manufacturers expect their proportion of UK suppliers to moderately increase over the next two years.
Trade deals beyond Europe
There’s no reason for businesses to limit their horizons to Europe, of course. Higher-growth markets beyond the bloc offer attractive prospects.
‘Continuity’ trade deals are gradually being forged that will allow UK businesses to trade with territories on roughly the same lines as they did via EU agreements. This is now the case for South Korea, for example. A Free Trade Agreement deal with Japan is expected to be finalised soon.
If other Asian countries follow this pattern, it will trigger opportunities for supply chain diversification as well as customer markets. For instance, a free trade deal with Vietnam would open up potential bases for low cost production alternatives to China.
Your support network
Of course, importers and exporters alike will need to stay aware of potential changes in documentation, customs declarations, physical checks, labelling requirements and licensing controls.
For all these reasons, it’s well worthwhile keeping abreast of trade developments with Europe and beyond. I do appreciate, though, that running a business allows little time to follow the minutiae of trade talks or study the fine print of new deals.
This is where we come in. HSBC’s economic experts are always on top of the detail, ready to offer analysis in a form that’s practical for your purposes.
Our trade expertise and unrivalled extensive global networks are at your disposal too. Tap into our deep knowledge of EU markets and our presence across the continent. We’re there to help you make new connections and source new partners, suppliers and customers.
Wherever your ambition takes you, we’ll be alongside.