18 December 2018

Optimistic and outward-looking – UK business in focus

How do UK companies feel about their future in the run-up to leaving the EU? And where are they focusing their energies? Our latest HSBC Trade Navigator survey (carried out in September 2018) takes the temperature of UK businesses and reveals some surprises.

Read the full report here.

The prospect of leaving the EU is looming, and global trade protectionism is on the rise. But our latest Navigator survey suggests that UK firms are feeling confident about the outlook for trade, at least in the short term.

It’s a finding that perhaps runs counter to intuition, given that 2018 has been a year of unusual volatility and lacklustre GDP growth of around 0.4 per cent a quarter.

However, four out of five companies (80 per cent) told us that they felt positive about international trade, thanks to healthy global economic growth. For many exporters, a weaker sterling value has also boosted international trade margins without, as yet, any post-Brexit barriers.

Targeting the US, Germany and France: another surprise in the survey?

Germany and France were cited in the top three target countries for expansion over the next three to five years. This suggests that companies have some confidence that the UK will keep a degree of free trade with the EU. In fact, 40 per cent of UK companies see Brexit as a positive, 22 per cent expect no impact and just 31 per cent consider it a negative.

The top target, however, was the US, despite the finding that two-thirds of UK businesses surveyed thought governments were becoming more protective of domestic firms – a rise of nine percentage points since our last survey in March.

With international expansion in mind, it’s vital to understand the business environment of any new market. Our 17 International Business guides each give an in-depth analysis of an important market – from Hong Kong and the UAE to the US and India.

Meanwhile, we asked companies where their priorities lay for future developments. Growing their market share came out on top for a third of respondents, followed by an increased focus on productivity and upskilling the workforce.

The latter two may well reflect the challenges of a tight labour market (with unemployment at a 43-year low) and declining inward migration, particularly from the EU.

Focusing on smart data

More than three-quarters of UK firms we surveyed use data to optimise their performance – operational data was the most common, followed by market, transaction and customer data. Companies cited the ‘internet of things’, more efficient manufacturing and meeting customers’ demands for privacy as the most significant opportunities for them.

It’s interesting to note that the focus on digitisation was stronger for firms between five and ten years old – perhaps because technology is more a fact of life for younger companies.

Improving the supply chain

Making the best use of technology was also seen as the top priority when improving supply chain performance, followed by changing to lower-cost suppliers and doing business in new markets. Cost reduction was cited as a key aim for a third of firms.

Ensuring environmental and ethical sustainability also ranked highly. 69 per cent of manufacturing businesses, and 60 per cent of services firms, said these were important to them and that they were level with, or ahead of, peers in their focus on sustainability.

The full HSBC Navigator report looks at the now – and the next – for UK companies, and suggests how your business might gear up for the future.

40%

UK companies see Brexit as a positive

22%

Expect no impact

31%

Consider it a negative

Four out of five (80%)

UK companies who told us that they felt positive about international trade, thanks to healthy global economic growth.

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