A recent study conducted by Bibby Financial Services has shed light on the challenges faced by small and medium-sized enterprises (SMEs) in the United Kingdom when engaging in international trade. The research points to a complex and challenging environment for these businesses in the post-Brexit landscape.
A significant portion of the SMEs surveyed, 58%, identified the combined effect of high tariffs, customs, and trade barriers as the primary obstacle in their overseas trading endeavors. These challenges are further exacerbated by several other factors: 49% of the respondents indicated that the cost of doing business internationally is a concern; 41% are affected by currency fluctuations; and 15% are impacted by political instability in their target markets.
The issue of currency fluctuations, in particular, has been detrimental, with almost half (47%) of the UK SMEs reporting losses due to this factor over the past year. Additionally, a substantial proportion of these businesses, including 39% of importers and 37% of exporters, express a desire for the next UK government to focus on negotiating favorable trade agreements that could enhance the conditions for international trade.
Michael McGowan, Managing Director at Bibby Foreign Exchange, commented on the situation, highlighting the impact of global instability, such as the conflict in Ukraine and tensions in the Middle East, on currency fluctuations. These global events have significantly influenced the trading conditions for UK SMEs. McGowan underscored the importance of tariffs, customs, and trade barriers as the most pressing challenge for SMEs engaged in overseas trade. He empathized with their dissatisfaction with the current trade environment and supported their call for the government to take meaningful actions to improve international trade conditions. Moreover, McGowan advised SMEs to focus on factors within their control to mitigate the adverse effects of currency fluctuations.
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