Exporters in the North East are buoyant about their 2018 trade prospects with a net balance of 20 per cent expecting overseas sales to increase over the next six months, according to the latest Business in Britain report from Lloyds Bank.
This is on the back of a strong end to 2017 in which a net balance of 27 per cent said their international trade had increased in the second half of the year.
Around two in five (41 per cent) of the region’s businesses now export their goods or services –up nine points from 32 per cent six months ago and edging above the national average of 40 per cent.
While some are facing new challenges, with 43 per cent of North East exporters deciding to focus more on UK sales in light of Brexit, most are optimistic about what lies ahead.
Simon Quin, Scotland, North East and Yorkshire area director for Global Transaction Banking, SME at Lloyds Bank Commercial Banking at Lloyds Bank, said: “A growing number of North East firms now do business overseas, with the majority seeing international trade playing an important role in their plans, despite the continued climate of domestic and international uncertainty.
“Judging from North East firms’ export performances over the previous six months, this confidence is not misplaced and by using international trade as a growth strategy for their business British firms can also manage risk during periods of uncertainty.”
The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, including 73 in the North East, and tracks a range of performance and confidence measures.
Barriers to exporting
Among North East firms as a whole, 40 per cent say the biggest barrier to exporting is exchange rate uncertainty, followed by difficulty finding potential customers (cited by 12 per cent) and industry specific regulations (cited by eight per cent).
A net balance of 30 per cent of all businesses across the North East also say the fall in the value of the pound is bad for the economy, with 32 per cent saying it’s bad for their business.
Despite that, those firms that do export are predominantly upbeat about the opportunities ahead.
International markets
Based on their current overseas trading, the current top three most popular partner countries for North East firms are France, to which 20 per cent of North East companies export goods or services, followed jointly by Germany and the USA (both 17 per cent).
Looking ahead, the country exporters in the region expect the biggest opportunities for international trade to come from is the USA (27 per cent), followed by Germany (17 per cent) and France (seven per cent).
Simon Quin added: “While not the most popular partner at the moment, North East exporters see the trade market in the USA as the promised land as they look to pre-emptively tackle the impact of a potential loss of access to the EU single market.
“Given the familiarity of UK businesses with the products and culture of the USA, and the fact they are primarily English-speaking, it is understandable that this is a key target for North East exporters. However, I would encourage exporters not to neglect other countries, as they may be more accessible than they might think and there are numerous sources of help available to manage this process.
“Trading overseas can feel intimidating, but with the fall in the value of the pound making a lot of British exports more attractive overseas I’m certain that there are many opportunities for North East exporters to prosper globally with the right support.
“Lloyds Bank is here to help, and our strategic partnership with the Department for International Trade as well as teams of North East-based relationship managers can provide the kind of insight, support and introductions that can be invaluable to firms setting out on, or expanding, their export journey.
“To support customers further we also provide access to our International Trade Portal which helps both current and prospective exporters understand the best market for their product or service, the trading requirements and conditions for that market, as well as buyers or suppliers they may wish to work with. Lloyds Bank can also help customers manage other risks associated with international trade, for example foreign exchange risk. It’s a big step in the right direction to help new or experienced exporters navigate the sometimes tricky international trading waters.”
David Coppock, Regional Director for the North East at the Department for International Trade, said: “Across the North East, businesses are taking advantage of the huge demand for British products overseas.
“Exporting is a journey for any business, but challenges and complexities can be overcome and results show that it’s worth doing for firms seeking resilience and growth”.