Coronavirus hits international trade
A survey carried out before and during the COVID-19 pandemic suggests that most companies which were planning to export or trade overseas cancelled or delayed their plans due to the pandemic.
Prior to the pandemic, in November and December 2019, 39% of businesses taking part in a survey commissioned by Kreston International said they’d cancelled or delayed plans to export or trade overseas in the last three years – with most blaming Brexit or the related uncertainty of Britain’s international trading relationships.
When the survey was repeated in May 2020, that rose to 55%, with most saying it was due to the coronavirus pandemic.
The survey also found that 80% said that COVID-19 had put stress on their business and that business leaders are split on whether the virus will provide more opportunities or obstacles ahead.
However, the results also indicate that UK businesses are planning for increased international trade over the next 12 months as they anticipate a post-COVID bounce. 45% expect international trade to return within 12 months and 40% expect to see increased levels of import trade.
The research, which was based on a survey of 1,109 business leaders in November and December 2019 and 514 business leaders in May 2020, is published in the report ‘Trading internationally in 2020 – A Post COVID-19 Perspective‘ by Kreston International.
Kreston International is a global network of 200 accountancy firms across 110 countries employing more than 23,000 people. The report was spearheaded by UK Kreston member firms, BHP, Bishop Fleming, James Cowper Kreston, Kreston Reeves and ourselves.
While 55% of businesses have cancelled or delayed plans to export to overseas markets or trade internationally as a result of the COVID-19 pandemic, 51% said their view on the importance of international trade has increased.
The report also found that:
- 71% of businesses in this survey said they were trading internationally before the pandemic
- 55% of businesses have delayed or cancelled plans to trade overseas as a result of COVID-19
- 51% of business leaders say their view on the importance of exporting has increased in a post COVID-19 world
- 40% of business leaders surveyed expect to see import trade increase
- 45% of business leaders expect international trade to return within 12 months, suggesting they are expecting a v-shaped recovery
- Of those businesses that were not trading internationally before the outbreak of COVID-19, 34% say they are likely or very likely to expand internationally in the next three years
- 39% of business leaders believe COVID-19 will provide opportunities for their business, while 38% said it will lead to obstacles
- 31% think European markets are most likely to grow for their business over the next five years.
Kreston board member and Managing Director of Duncan & Toplis, Adrian Reynolds said:
“The coronavirus pandemic has affected companies across the country and our survey shows the major impact it’s had on international trading, imports and exports.
“COVID-19 has, unsurprisingly, placed businesses under varying degrees of stress and temporarily halted much international trade – 80% of businesses told us that they are under a little or a lot of stress, and that 55% of them have delayed or cancelled plans to explore export markets or trade internationally as a result.
“While this is significant, it’s clear that business leaders are outward looking and optimistic about their international trade in future. Over half (51%) of those businesses surveyed say that their view on the importance of international trade has increased in a post-COVID world, and that 40% expect to see import trade increase. What is particularly encouraging is that 45% of businesses surveyed expect international trade to return within 12 months, suggesting the much hoped for v-shaped recovery.”
Prior to the pandemic, Kreston surveyed 1,109 small and medium-sized businesses for their views on the reputation of the UK internationally and barriers to international trade in November and December 2019, as the UK looked to officially depart the European Union.
That survey found 52% of businesses believed the UK’s reputation on the international business stage had improved in the last three years, with 70% of businesses saying that it is the skills and expertise of entrepreneurs and businesses that drives our reputation, while 79% said Brexit and politicians were responsible for diminishing it.
Liza Robbins, CEO of Kreston International adds:
“The first survey was due to be published in March this year but was delayed because of COVID-19. Yet as the UK looks to agree a trading agreement with the EU, its findings are still important and relevant.
“Our research found that the biggest concerns for businesses trading internationally are tax, VAT and duties (23%), currency fluctuations (20%), and tariffs and trade barriers (19%). Red tape (18%), the cost of international trade (18%), logistics (17%), and getting paid (14%) are all very real barriers to international growth. As we look to redefine our position on the world stage these remain live issues.
“We asked businesses what help they would most value when trading internationally, and, reflecting the complexity of international growth, there is no one single measure that would help more than others.
“Businesses told us that free trade deals (32%) would be the most helpful but would also want to see tax breaks (26%), financial incentives (25%), partnering opportunities (25%), less red tape (23%) and help in identifying customers (21%). A package of support is quite clearly required to help British SMEs take on the world.”
Businesses looking to trade internationally turn to many different sources of information for advice including professional or trade body (41%), Department for International Trade (39%), accountants or financial advisers (32%) and local chambers of commerce (31%).
Adrian Reynolds adds: “Brexit will bring both challenges and opportunities in terms of international trade for UK businesses. The outward looking ambitions of business leaders is encouraging, but government, professional and trade bodies, as well as their advisers, all need to play a greater role in helping secure the long-term international future for British business.”
Read the full post-coronavirus perspective survey results report here.
You can find out more about our involvement with Kreston International and supporting businesses to trade internationally here.