International Trade: Confidence, concerns and risks for UK SMEs

1. INTERNATIONAL TRADE:
CONFIDENCE, CONCERNS AND RISKS FOR UK SMES
74%
73%
GOVERNMENT
EXPORT-LED
Study reveals that overseas trading is seen as a key element of the UK’s economic recovery. However, confidence in international RECOVERY
trading has decreased, with millions of small businesses believing there is not enough advice, support and information available for
British businesses. Currency fluctuations are amongst the biggest concerns when it comes to trading internationally, yet UK
businesses are in danger of losing billions of pounds by not managing their currency risk. The International Trade Tracker from
American Express FX International Payments questioned 1,500 SME business leaders in the UK, Australia and the USA.
KNOWLEDGE GAP
? 82%
Q: Do you feel Q: Do you Q: If currency
there is enough manage financial fluctuations are
help and risk when trading a concern, which
information? internationally? currency in the US Dollar is the top currency
particular of concern for the US and Australia.
NO: NO: NO: NO: NO: NO: worries you? However this is only the second
most concerning for UK SMEs, with
26% 46% 47% 55% 54% 61% the Euro topping the bill for 56% of
2.2 million UK SMEs CURRENCY UK SME business leaders.
think there is not enough FEAR FACTOR
advice, info and support
available for international
trading Q: Has your
confidence in IMPACT UPON
trading
CONFIDENCE
internationally
decreased? TO TRADE $! €! $!
Decrease INTERNATIONALLY
34%
76%
36%
81%
24%
73%
In the past 12 months US Dollar Australian Dollar Japanese Yen
36% of UK SMEs say their confidence Sterling Euro Canadian Dollar
in international trade has decreased,
81% of which cite that this decrease Swiss Franc
occurred in the last 12 months.
TOP CONCERNS MACRO EFFECT
WHEN TRADING
£20.4bn at Risk - 55% of
INTERNATIONALLY UK SMEs do not manage
currency risk, putting the
Currency fluctuations Pricing
55% average UK SME at risk to
lose £19,745 a year,
Currency fluctuations Red tape and legislation bringing a national bill of
International trade
40%
37%
31%
49%
36%
29%
62%
30%
31%
are the top concern for
paperwork £20.4 billion
49% of UK SMEs Payment problems
ie, cash flow
It is not surprising that currency fluctuations are the number one (55%) of UK SMEs do not protect themselves from risk. The lack of
CONCLUSIONS: concern for SMEs trading internationally. For example, since the
beginning of 2011, the US dollar has weakened by over seven
percent against Sterling. Despite the currency concerns, over half
protection is largely due to a knowledge gap, as 21% of UK SMEs
say they are unaware of the benefits and an additional 28% citing
they have never considered it before.