More than half UK firms are pivoting toward the European Union to navigate their way through economic turbulence.
A groundbreaking survey carried out by HSBC UK found that 53 per cent of companies are targeting trade with the continent in spite of post-Brexit rules and renewed Brussels red tape.
Surveying 2,000 firms in one of the biggest and most comprehensive reports from the banking giant, its Going Global for Growth study outlines how firms are looking to trade to pursue growth amid major economic challenges.
This comes as many UK companies are facing pressures due to the cost of living crisis, with both supply and demand being hit by rising inflation, borrowing rates and stagnating wages.
According to the study, the key driver of turning to the EU was an existing trading relationship and close physical proximity, with the lure of gaining access to a huge market of around 450m people.
The report also outlines that UK firms are looking towards north America and South East Asian markets, 37 and 35 per cent respectively, in addition to the Middle East and North Africa, at 34 per cent.
Ahead of the budget on Thursday, with inflation at 10.1 per cent a raft of cuts and tax increases expected, businesses were perturbed by a series of global and national challenges.
Some view the geopolitical risks (48 per cent) as a major obstacle, in wake of the ongoing war in Ukraine which has unsettled markets and inflated the price of oil and gas across Europe in particular.
Global trade is a key factor to 53 per cent of firms’ prospects for future growth, with eight per cent of companies – equaling to 448,000 across the UK, want to start trading across borders.
Yet almost two fifths of those considering international expansion were put off by the costs of doing business, and 30 per cent had concerns over labour shortages, supply chain problems and logistical issues.
With so many economic challenges at play and on the horizon, about a third of companies have looked to insulate themselves from risks. 31 per cent were being more selective with customers and one in five decommissioned products which were end longer viable.
HSBC UK’s research also found that more than 40 per cent of firms are turning to digital options, so they can try out the market without committing fully.
Businesses are “adapting by embracing greater international diversification” said Cora McLaren, managing director and g=head of international subsidiary banking at HSBC UK. “Not only does this provide important protection for businesses, it also generates opportunity.
“Our research shows how UK businesses are prioritising international trade as integral to their growth”, with the majority opting for the EU.