Risk & Economy » Brexit » EU most important market outside of UK for future growth

Nearly a third of UK mid-market businesses with international aspirations see the European Union (EU) as a key market for future growth, according to a recent survey by accountants RSM.

The survey- part of a wider report by RSM entitled ‘Global growth – connecting your world to ours- revealed, that political uncertainty was the biggest challenge facing businesses today when looking to expand (30%).

The survey revealed 90% of the 210 companies surveyed said they held aspirations for future growth overseas. Of those, whilst 33% saw the UK as a key market, it was the EU that was seen as presenting the greatest opportunity beyond the domestic market (30%)

Mark Harwood, partner at RSM, said: “There is no question that Brexit has encouraged an increase in interest in economies outside of the European Union – a pragmatic approach to potentially offset any future implications of exiting the customs union. However, what these findings suggest is that the common belief that most middle market firms see themselves as exclusively focused on local and/or domestic trading is wrong. Appetite from UK middle-market businesses to trade with countries within the EU is very much alive and kicking.”

Nevertheless, UK companies that already had a presence in overseas territories saw things differently. 36% of these businesses believed the US would offer the greatest opportunity for growth over the coming 12-14 months.

Amongst these seemingly pro-US businesses, the significance of the EU diminished, ranking the EU as low as fifth, behind the UK, US, non-EU European counties (29%) and China (24%).

 Despite the appetite to do business in countries within the EU, those businesses need to be aware of the need to qualify to do so.

Brad Ashton, international trade and customs partner at RSM said: “Around 240,000 EU-only UK trading businesses will need an EORI (Economic Operator Registration & Identification) registration number from HMRC to make customs declarations in the event of a no deal. But there are clearly tens of thousands of small and medium sized businesses that are unprepared.

“The government must ramp up its communication with affected businesses to ensure that they can keep trading with their EU customers and suppliers in the event of a no deal,” he added.

Of those surveyed, 70% said they are planning some form of overseas business expansion over the next 12-24 months, 36% of those who plan to establish a new branch in a country they don’t currently operate in.

The majority of those businesses surveyed who have any interest in overseas markets (67%) believe that international trade will play a fairly or critically important role in their business operations over the coming five years.