Looking at international markets, 40% of all businesses say that these have become more important due to current challenges. Other drivers of growth include domestic growth (32%), diversification (29%), and digital growth (21%). Almost half (44%) of UK companies cite growth in both new and existing international markets as a key driver of recovery from the current challenges. There is hope for recovery as the barometer examined the challenges and opportunities for growth in 2023. But businesses need support to help them to navigate the challenges of rising costs, tough UK economic conditions, and delays in receiving goods.” Opportunities to recover John Carroll, Head of International & Transactional Banking, Santander UK said: “Faced with rising inflation, rising energy and transport costs, and a difficult winter trading season ahead, it’s reassuring to see UK companies continue to remain resilient as they head into a challenging operating environment. Small and medium-sized businesses (SMEs) making overseas purchases in foreign currency and importing into the UK are particularly vulnerable to this given the current unfavourable exchange rate. Looking beyond the UK, falls and fluctuations in the value of sterling against foreign currencies are giving businesses increased cause for concern, with 31% reporting this to be an issue now compared to just 24% last spring. Rising input costs are affecting manufacturing businesses the most and rising transportation costs are impacting wholesale and retail businesses. Delays in goods reaching them (for 61% of businesses) amplify the concerns. Rising energy costs (56%), alongside labour (47%) and transportation costs (43%), are also concerns. Three-quarters of businesses say the costs of goods and materials have increased in the past month and the same expect these costs to rise next year. Rising energy costs are now a concern for over half (57%) of businesses and 52% of businesses worry an economic slowdown in the UK will cause them problems, with fears for the global economic climate (42%) growing too.Ī common response to these negative impacts is for businesses to increase the price of their products and services (49%). Going together with this, concerns about interest rate rises have grown sharply, hitting 35%, compared to just 26% six months ago. Businesses respond to rising costsĭespite confidence and resilient investment plans, inflation fears have moved to centre stage, with another sharp spike in concern, up to 62% (from 43% in spring this year). Investment plans remain resilient for now, with almost half (47%) of businesses planning to hire new staff, 43% investing in staff training, almost a third (31%) planning to invest in R&D, and over a quarter (26%) focusing on digital transformation – all up on spring 2022 Trade Barometer figures. 86% of businesses say they are well placed, or at least coping, in the current economic environment, however, seven percent have said that they are now starting to struggle. The South-West and Wales saw the biggest fall, down 16% since Spring 2022 to 63%.īusinesses surveyed have largely recovered from the pandemic – adapting to operate successfully amid its lingering effects – with more than half (54%) saying that performance had accelerated over the last 12 months. Confidence among regional businesses has fallen in all regions except Scotland, which has risen almost 10% from 69% to 78%. Falling confidence has impacted UK-only businesses more, with only 64% of these companies expecting growth versus 72% of international businesses. However, confidence has fallen for the first time since it hit a low of 59% in autumn 2020, with fears around high-interest rates, inflation, energy costs, and UK economic conditions starting to materialise. Despite the current economic conditions, over two-thirds (70%) of UK businesses are confident about growth over the next three years, according to the latest Santander Trade Barometer published recently.
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