UK businesses are sharply scaling back their investment intentions due to the ongoing economic uncertainty, according to the latest Santander Trade Barometer research.
Fewer businesses expect to grow over the next three years, with UK-only firms especially downbeat. Just 23% of businesses are very confident of future growth over the next three years, while 16% say they are pessimistic or very pessimistic about their growth. Those businesses aspiring to be international remain the most confident.
The potential for an economic slowdown in the UK over the next 12 months is the key driver of diminishing business confidence, cited as a concern by over half (55%) of businesses. General anxiety about Brexit has now given way to specific concerns about supply chain links to EU countries (34%), tariffs on EU sales (31%) and reduced trade with the EU (32%).
The ability to attract and retain skilled staff also remains a significant worry for UK businesses, with 55% saying this will be one of the most important drivers of growth over the next three years – even more important than reaching a satisfactory Brexit conclusion.
John Carroll, head of international & transactional banking, Santander UK said, “There’s no doubt businesses are worried about the UK’s uncertain economic outlook, leading many to significantly scale back their investment plans.
“However, it’s important that businesses don’t lose sight of the huge potential offered by international markets to bolster their growth when faced with unpredictability at home. We know it’s not easy, but those bold enough to look overseas can reap the benefits.
“Santander has already helped over 500 business to realise their overseas expansion opportunities and we’ll continue to do so this year with over 90 virtual and physical trade missions supporting UK companies to make the most of opportunities in new markets.”
For those businesses considering international expansion, the US is now the most-favoured target market, though many firms do still anticipate growth in Europe. Increasing trade outside the EU is seen as a popular contingency plan to manage uncertainty with the UK economy.
“Santander’s recent analysis of the Office for National Statistics (ONS) top 50 goods export markets2 showed that the top 10 fastest growing markets in 2018 were predominantly made up of non-European Union countries.