SME EXPORTERS UNDER TIGHTENING PRESSURE

18th January 2023

A survey of more than 2,300 UK SME exporters has revealed UK overseas trade continues to languish as the global economy heads into another difficult year.

• Most Small and Medium Sized Enterprise (SME) exporters report no improvement to exports, with 27% reporting decreased export sales in the quarter and 47% reporting no change. 

• Only 26% of SME exporters saw increased export sales 

• The picture for future orders is even weaker with 28% reporting a decrease against 24% an increase 

• Three biggest cost pressures for SME exporters are energy (72%), labour (67%) and raw materials (61%). 

More SME exporters are continuing to report falling export sales (27%) than are reporting an increase (26%).

Just over a third of SME exporters (36%) expect to see increased profitability in the next 12 months, while an almost equal number (35%) expect a decrease.

The BCC’s quarterly Trade Confidence Outlook for Q4 2022 also showed the squeeze on SMEs exporters operating margins remains, with 64% expecting to raise their prices.

Three main cost pressures continue to dominate as utilities, labour costs and raw materials are again the biggest concerns cited by exporters. 

Responding to the findings,Head of Trade Policy at the British Chambers of Commerce, William Bain said:  

“Last autumn the World Trade Organisation forecast global trade growth of just 1% in 2023, down from 3% in 2022. This is creating huge headwinds for smaller UK firms battered by the pandemic, Brexit and energy price shocks. 

“China’s sudden full reopening may also create additional supply chain turbulence this year, should the Covid pandemic continue to impact health and economic output.

“Against this background it could be sometime before the global shipping and trading systems returns to anything approaching normality. 

“The UK government cannot afford to sit idly by as we head into such uncertain trading conditions.  

“It must throw a lifeline to our struggling exporters who are desperately trying to keep their heads above water. 

“Despite recent very welcome progress on data sharing, the unresolved Northern Ireland protocol situation is still influencing the UK’s relationship with the EU and the US. 

“Resolving the remaining protocol issues unlocks the potential for benefits for UK businesses in both east and west directions, as well as for Northern Ireland.  

“Outside of the EU, the US is our biggest trading partner, and the one that BCC members are most interested in, yet progress on free trade talks are stalled. 

“As the Good Friday Agreement anniversary looms the UK has a golden opportunity to transform our trading relationship with our two biggest export markets in one fell swoop. 

“Other measures Government should consider include providing effective end-to-end trade finance and setting up a trade accelerator – by working alongside our global network to help firms enter new markets and maximise sales.”