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International
Trade Monitor
April 2015
Views and opinions of over 1,000 UK small and medium enterprises involved in international trade
UK SMEs call for simplified tax
system to boost exports
The latest findings from the International Trade Monitor reveal that 84% small
and medium-sized enterprises (SMEs) are confident in the UK’s economic climate.
Such confidence may not seem that surprising, especially given the improving
macroeconomic conditions over the last 12 – 18 months and the fact that the
UK is one of the fastest growing economies in the developed world. It is equally
reassuring to see that the vast majority (89%) of the UK SMEs surveyed believe
that this improvement is sustainable.
84%
89%
Are confident
in the UK’s
ecconomic climate
Believe this
improvement
is sustainable
Investing for growth but costs are on the up
Over half of business owners (59%) said they plan to increase investment in their
company, an increase of 10% from the same period last year.
However, despite deflation being at a record low, nearly half (47%) of SMEs have
seen rising costs in their business, which they appear to be combatting by increasing
prices. Twenty two per cent said they will increase the prices they charge in the
next 6 – 12 months, an increase from 18% nine months ago in Q3 of 2014.
A question of tax
For the first time the ITM asked SMEs about which government policy they would
change in order to make their business more successful. Not surprisingly, the top
two relate to taxation and, in the lead up to the General Election, British SMEs will
be listening closely to how the major parties are promising to help importers and
exporters in the next parliament.
The top five policy changes are:
87%
A simp
li
tax sys fied
tem
81%
r tax
Greate r
relief foers
export
68%
Greater
access
to credit
/finance
26%
Reformcost
to the ess
in
of bus
rates
22%
Inve
in higstment
digit h spee
d
infra al
struc
ture
Interestingly, only 5% of respondents said legislation on late payments would make
a difference to their business, despite previous surveys regularly citing late payments
and cash flow regularly being as top concerns for SMEs.
Tony Crivelli
UK Managing Director of Western
Union Business Solutions said:
Despite inflation falling to zero,
we cannot ignore the fact that
Britain’s businesses are still faced
with rising costs. Whilst previous
surveys showed that SMEs were
reluctant to pass on these costs to
customers, the mood is beginning
to change; one in five plan to
increase their prices in an attempt
to protect profit margins.
SMEs are seeking new customers
in the growth markets of China
and India. Both of these markets
represent two of the largest growing
middle classes across the globe who
are demanding goods and services.
Expanding into these markets is not
without risk; SMEs will be wise to
implement robust risk management
strategies in order to manage
exchange rate volatility when sending
or receiving international payments,
in order to remain competitive
in the global market.
Top SME Concerns
SMEs continued to be worried about economic basics but there is a distinct
‘creep’ in concerns about regulation and political influence in the lead up to
the general election and uncertainty and the UK’s position in the EU.
Top Challenges for SMEs
53%
International
regulation
and
compliance
64%
60%
Cash flow
Overall health
of the economy.
Despite topping the list
this figure continues to fall,
in the same quarter
in 2014 the figure
stood at 72%
60%
Cheaper
competitors
UK EXPORT
MARKETS Q1/2015
WHAT ARE YOUR
CURRENT EXPORT
MARKETS?
56%
Currency
41%
Political
volatility
influence
WHICH COUNTRY REPRESENTS
THE BIGGEST OPPORTUNITY
TO MARKET YOUR BUSINESS?
2%
78%
23%
NORTH AMERICA
EUROPE
0%
RUSSIA
15%
12%
21%
8%
14%
AFRICA
INDIA
10%
OTHER ASIA
OTHER SOUTH AMERICA
9%
3%
BRAZIL
14%
5%
34%
6%
16%
4%
CHINA
4%
7%
OTHER
3%
AUSTRALASIA
4%
Export revenues and
SMEs eye up China
UK SMEs are more confident about international trade
conditions than ever before, with 91% of respondents
feeling confident during the first quarter of 2015,
compared to 87% the previous quarter. This is
reflected in the fact that now over a quarter (26%)
of SME business revenue comes from exports,
a 10% rise from the previous quarter.
Media Enquiries:
Sally Walton / Vanessa Chance
+44 (0) 20 7382 4740
[email protected]
A fifth of UK SMEs (21%) now export to China, an increase from 15% the previous
quarter. Exports to Europe remain consistent, with 78% of SMEs exporting to the
Continent in the last 12 months. The research shows that sluggish Eurozone growth
has led to more UK SMEs turning their gaze towards the Chinese and Indian markets.
Over a third (34%) of UK SMEs said China has the greatest export market potential
in the future, an increase from 25% six months ago. British SMEs are also increasingly
regarding India as a growing export market, possibly in line with the country’s economic
advances*; 10% of SMEs believe India is the country with the biggest export
opportunity, more than double the proportion from Q3 2014 (4%).
34%
10%
of UK SMEs
said China
has the
greatest
export
market
potential
of UK SMEs
believe India
has the
biggest
export
opportunity
*http://www.tradingeconomics.com/india/gdp-growth-annual
Exports to Europe remain steady with an average of 78% of SMEs in the last
12 months exporting to Europe.
A further 44% of SMEs said they believe the proportion of export earnings to overall
revenue will increase in the next 12 months. This is a signal that export assistance
from the UKTI as well as the Bank of England’s investing in micro-financing initiatives
is being realised by SMEs across the UK.
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Western Union Business Solutions is a division of
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(which does business under the trade name of Western
Union Business Solutions) or Western Union Business
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Western Union Business Solutions (UK) Limited
(Registered in England, Company Number 02854737,
Registered Office Address: 12 Appold Street, London
EC2A 2AW) is authorised by the Financial Conduct
Authority under the Payment Services Regulations
2009 (Register Reference: 536611) for the provision
of payment services and is registered as an MSB
with HM Revenue & Customs (Registered No: 12122416).
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