A new report led by Lloyds Bank has revealed that half of Britain’s largest services firms are planning to take their services to new international markets in the next 12 months, as caution about the UK economy rises.
Bosses of UK services businesses believe the EU continues to offer the most potential despite present uncertainty, followed by the Far East and China. Nine in ten of those launching an export push are doing so via mergers or acquisitions whilst two in five are expected to remain UK-focused.
Lloyds Bank Commercial Banking’s report, ‘Businesses in Britain’, shares insights of large services businesses, from legal and accountancy firms to recruitment, IT and software services, businesses processing outsourcing and support services. The other two-third includes businesses which have a turnover of £500m or more.
Although firms face inherent challenges in exporting services, such as differing legislation and regulation in international markets, the UK enjoyed an £83.4bn trade surplus with the rest of the world back in 2017.
Today, only a quarter of services firms expect the UK economy to grow in the next 12 months whilst a third predict it will contract, despite the upbeat outlook on international prospects.
The report led by Lloyds Bank also highlighted that 74% of services firms forecast a rise in their turnover in the next five years whilst 48% believe a no-deal Brexit encompasses a risk to growth.
Mark Burton, Managing Director of Services and Telecommunications, Media & Technology at Lloyds Bank Commercial Banking, said: “Much of the UK’s services sector is world-class and recognised as such in international markets, something underlined by companies’ optimism about their trade plans for the next year. Many are seeing potential in faraway parts of the world such as Asia, but firms here remain focused on the EU as their key export market in the immediate future.
“Plans to expand overseas reflect the ongoing international demand for UK expertise and a desire to access the markets that will shape the future global economy. This could be testament to the fact that a minority expect the UK economy to contract in the next 12 months and services companies are bullish about their growth prospects.”
The Business in Britain report also discloses that UK services firms are being proactive in investing technology to boost their growth.
The findings revealed that more than eight in 10 firms are either automating work or planning to do so, enhancing their ambition to embrace the new technological era.
Yet, 43% admit technology investment will likely lead to some job losses- though these could be process-based roles as the focus switches to higher-value jobs. Over a five-year time frame, 52% say they will create jobs.
These last findings resonate with a report disclosed last month in which MPs on the Business, Energy and Industrial Strategy Committee predicted that technological investment will result in an increased amount of jobs along with improved pay.
Burton concluded: “The tech revolution is reshaping every sector as it can help to drive efficiency and improve performance to meet customers’ ever-evolving needs and expectations. In the services sector, this also presents competitive advantages – at both home and abroad – and, through time, job creation including better-paid, higher-value roles.