At the start of year, few people would have predicted the volatility that has come to define 2016. The result of the EU referendum sent shockwaves through the entire nation and, months later, businesses are still working hard to get to grips with the repercussions.
While the UK remains in the EU for the present, predictions abound about what life post Brexit will look like and how trade will be impacted. The uncertainty has already sent ripples of negativity through the economy giving businesses new risks and challenges to face.
The UK’s credit rating has been downgraded and sterling has dropped against major global currencies. Fears surfaced about a return to recession with obvious concerns over the potentially catastrophic consequences for business and on consumer confidence. Following the referendum result, Atradius economists warned that GDP, a key indicator of economic growth, could fall between one to three percent in the next two years. The rate of business failures is closely linked to developments in GDP, so a deterioration in economic growth is likely to have adverse consequences for the business environment. Accordingly, the latest Atradius economic report predicts that insolvencies are set to rise by up to 3% in 2017.
Today, the ‘Brexit conscious’ environment offers businesses both risk and reward. The devaluation of the pound has delivered opportunities to exporters who find themselves more financially competitive. Made in Britain is an attractive ‘brand’ around the globe and smart businesses will be able to capitalise on their products and services being perceived as more affordable. With the weaker pound opening doors for UK exporters, forward-thinking companies could see their order book increase as existing clients look to buy more for their pound and with potential for new opportunities from new customers in new countries.
Europe has been an attractive trade partner due to its close proximity and EU trade agreements but opportunities exist all across the world and the horizons of UK businesses should not be limited by geography. Positively, the Brexit shake-up has already stimulated businesses to start considering new trade destinations and UK firms are well placed to realise growth by going global.
That said, it’s important for businesses to look before they leap. While there are rewards to be reaped, new opportunities are not without with new risks and businesses need to be fully prepared. Researching new customers to ensure that they are financially robust is essential in order to avoid the risk of non-payment. An understanding of the market is also important recognisng that each country may have different laws, cultures and trading customs that must be adhered to. Both sales and credit risk management strategies need to be tailored for each country and risks analysed for each new trading partner. An eye must also be kept on any potential changes to UK trade policy and range of regulations. Change may hold both reward and risk in its grasp.
With the right mind-set, preparation and protection, UK businesses are poised to take advantage of the wealth of opportunity that international trade offers.
Atradius is well-versed in identifying trading risks and working with businesses to realise new opportunities both at home and abroad. An export expert, Atradius is the first port of call for businesses looking to trade overseas. With firmly established historical roots, Atradius was set up by government to help businesses export after WWI. More than 90 years on, as a private company, this legacy continues with thousands of new credit limits opened each and every day.
To find out more about Atradius and its export expertise, visit one of the Atradius’ stands or speaker sessions at the Going Global event at the London Olympia on November 17 and 18. You can also find out more information and access a suite of free economic reports, export guides and trading advice, at www.atradius.co.uk or via Twitter by following @AtradiusUK.
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