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Kreston Reeves survey reveals impact of Covid-19 on international trade plans for SMEs in the South East

More than half (55%) of small and medium-sized firms (SMEs) in the South East have cancelled or put on hold plans to trade internationally as a result of the Covid-19 crisis, a new survey has revealed.

But there is increasing confidence the opportunities will return with 51% saying their view on the importance of international trade has increased.

Businesses have been hit by the lockdown with international trade plans on hold - but there are hopes of a 'V-shaped' bounce back
Businesses have been hit by the lockdown with international trade plans on hold - but there are hopes of a 'V-shaped' bounce back

And that points to the 'V-shaped' recovery many are hoping for.

It comes after more than 500 SMEs were polled in a survey commissioned by accountants and business advisors Kreston Reeves, which has offices in Canterbury, Chatham and Sandwich, and Kreston International.

The research, conducted in May found 45% of businesses surveyed expect international trade to return within 12 months, while 40% expect to see increased levels of import trade.

Of those businesses that were not trading internationally before the outbreak, 34% say they are likely or very likely to expand internationally in the next three years.

Some 39% of business leaders believe the pandemic will provide opportunities for their business.

Andrew Griggs from Kreston Reeves
Andrew Griggs from Kreston Reeves

Andrew Griggs, senior partner at Kreston Reeves and board member of Kreston International, said: “Our research has shown that UK businesses are outward looking, generating considerable revenues from international markets.

"Covid-19 has, unsurprisingly, placed businesses under varying degrees of stress and temporarily halted much international trade – 80% of businesses told us that they are under a little or a lot of stress, and that 55% of them have delayed or cancelled plans to explore export markets or trade internationally as a result.

“But the research presents a much more positive picture. Over half say their view on the importance of international trade has increased in a post-COVID world, and 40% expect to see import trade increase.

“What is particularly encouraging is that 45% of businesses surveyed expect international trade to return within 12 months, suggesting the much hoped for V-shaped recovery.”

In November and December 2019, Kreston Reeves surveyed 1,109 small and medium-sized businesses for their views on the reputation of the UK internationally and barriers to international trade as the UK looked to officially depart the European Union.

An additional survey also looked at the impact of Brexit
An additional survey also looked at the impact of Brexit

That survey found 52% of businesses believed the UK’s reputation on the international business stage had improved in the last three years, with 70% of businesses saying that it is the skills and expertise of entrepreneurs and businesses that drives our reputation. But 79% of businesses surveyed in late 2019 believed it was the actions of politicians and policy that threaten our international reputation.

Andy Wallis, corporate and international tax partner at Kreston Reeves adds: “The first survey was due to be published in March this year but was delayed because of Covid-19. Yet as the UK looks to agree a trading agreement with the EU, its findings are still important and relevant.

“Our research found that the biggest concerns for businesses trading internationally are tax, VAT and duties (23%), currency fluctuations (20%), and tariffs and trade barriers (19%). Red tape (18%), the cost of international trade (18%), logistics (17%), and getting paid (14%) are all very real barriers to international growth. As we look to redefine our position on the world stage these remain live issues.

“We asked businesses what help they would most value when trading internationally, and, reflecting the complexity of international growth, there is no one single measure that would help more than others.

“Businesses told us that free trade deals (32%) would be the most helpful but would also want to see tax breaks (26%), financial incentives (25%), partnering opportunities (25%), less red tape (23%) and help in identifying customers (21%). A package of support is quite clearly required to help British SMEs take on the world.”

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