Confidence in export growth welcomed, but challenges remain for SMEs

Responding to the latest findings from the national survey of businesses exporting behaviour by the Department of Business and Trade, Tina McKenzie, Policy Chair of the Federation of Small Businesses said: “The findings paint a mixed picture of exporting. Goods exporters were more likely to report a decrease in activity last year, but the proportion of service exporters reporting a reduction was mitigated by the proportion of reporting growth.

“It’s however encouraging to see that 42% of all businesses believed UK exports would increase over the next five years, and the Government should keep this momentum up by making international trade easier for firms.

“As far as small businesses are concerned, excessive customs paperwork, cost burdens and supply chain and logistical issues can put overseas markets out of reach.

“Recent reports of the possible delays on import checks for EU goods in October might be helpful news for some, but small firms are still waiting for official word from Government. They need certainty to be able to plan ahead, especially when approaching Christmas.

“Unlike big corporates, most small international traders don’t have teams dedicated to customs clearance and rely on high-cost intermediaries to navigate new or unfamiliar border controls.

“Small exporters are also likely to face higher shipping costs than their larger counterparts as they are unable to commit to large volume shipments, so are less able to negotiate deals with couriers.

“Looking at this year, our own Small Business Index shows the net balance of exporters reporting growth in the value of their exports improved in Q2 2023 at -2.9%, up from -17.7% the previous quarter.

“This upturn, supported by a reduced supply-side disruption across the global economy, means many small businesses are still very eager to go global despite the bumpy journey and deserve further government support.

“Exporting is an important component of the overall economic output. If we want to avoid the expected recession at the end of this year, Government needs to act now and deliver an effective and streamlined trade infrastructure with clear guidance to help reduce the costs of trade.

“Building a small business-friendly Single Trade Window to deliver a ‘one and done approach’ to Government online data collection is essential, as is targeting business support towards those with high export potential, and those in sectors that say they find a lack of guidance particularly difficult.

“Committing to raising the de minimis customs threshold to £1,000 will cut costs immediately and encourage more small businesses to export.

“In general, policymakers should adopt a ‘think small first’ approach to customs policy development and place small businesses at the heart of new trade and customs structures to avoid disproportionate cost or administrative burdens. This should include commitments to robust piloting and phased implementation timelines.”