Brexit: SMEs expect export volumes to stall

Nearly half of UK SMEs expect to see their export volumes stall or decline after Brexit, according to a new report examining attitudes towards the UK’s EU departure.

In the latest edition of WorldFirst’s Global Trade Barometer, 46 per cent of small- and medium-sized businesses expected Brexit to have an impact on their exports.

Of the companies surveyed, 30 per cent said they currently export, compared to 52 per cent in a report compiled during the same period in 2016.

A third of SMEs expect to see no growth at all during 2017, while 23 per cent expect to see less than five per cent growth – a figure up three per cent since the first quarter.

Meanwhile, 24 per cent are worried about rises in inflation and 25 per cent expressed concerns over a potential fall in consumer spending.

The volatility caused by Brexit and other recent political events has led SMEs to adopt short-term hedge strategies, with contracts with terms of one month or less rising by 23 per cent and contracts with longer terms like a year or more falling by 33 per pent.

“More than 12 months on from the EU referendum, it’s clear that SMEs across the UK are still wary of volatility in currency markets and the disruption they can bring,” said Edward Hardy, economist at WorldFirst, commenting on the findings.

“The data shows that while SMEs were still happy to hedge their foreign currency exposure in Q2, many are hesitant to commit to longer-term hedging contracts.

“Whilst this may be rooted in uncertainty over cashflow, sales forecasts or other financial commitments, it could also be a sign of the first strains in the relationship between UK SMEs and global trade.

“While one quarter of data doesn’t make a trend, should this pattern continue, companies large and small will become more exposed to sharp fluctuations in currency markets.

“With Brexit talks still underway and September’s federal election in Germany, SMEs may find themselves unprotected just when they need protecting the most.”

For more from the report, see the WorldFirst website.

Photo © Duncan Hull (CC BY 2.0). Cropped.