UK firms optimistic on global expansion despite tariffs

New research has indicated that 73 per cent of UK businesses are confident about expanding internationally despite existing trade challenges.

The study, conducted by Equals Money, surveyed 509 senior decision-makers and found that an estimated 63 per cent expect that rising protectionist tariffs, such as those from the United States, will contribute positively to international growth efforts.

Businesses also express confidence in UK government initiatives, including financial services regulation reforms, the AI Opportunities Action Plan, and Invest 2035. Respectively, 70 per cent, 69 per cent, and 65 per cent of respondents believe these initiatives will drive domestic growth.

Importantly, Europe remains the most attractive region for UK businesses, with 46 per cent planning investments over the next five years. North America follows closely as a target for 38 per cent of businesses, while 17 per cent are eyeing opportunities in East Asia.

In reference to historical data, 41 per cent of UK exports were directed to the European Union in 2023, down from 53 per cent in 2003. This decline corresponds with a significant surge in services exports to countries outside the EU, which have more than doubled since 2003.

Highlighting another element of international growth, Thanim Islam, Head of FX Analysis at Equals Money, remarked, "With two thirds of businesses anticipating that rising protectionist tariffs could create favourable conditions for international growth, there's cause for optimism."

He added, "Historically, international expansion has been fraught with the challenges of FX fluctuations, but today's tools and strategies are making it easier than ever. With the right FX solutions and currency hedging, businesses can manage exchange rate risks, protect their margins, and capitalise on global growth opportunities."

The survey further found that 43 per cent of businesses view international expansion as a key growth driver. Additionally, nearly a third (31 per cent) see it as essential for future business survival.

When considering market selection, beyond the size of the market (40 per cent), respondents rated economic stability (38 per cent) as the paramount concern, followed by regulatory conditions (30 per cent), political stability (29 per cent), as well as labour costs and tax incentives (27 per cent).

Approximately 25 per cent of businesses are motivated by growing demand from international customers to pursue global market ventures.

However, the survey also identifies significant challenges in the international market. The most noted obstacles include compliance with regulations and legal requirements (38 per cent), establishment of partnerships and supply chains (37 per cent), and managing international payments alongside currency exchange risks (35 per cent).