UKs small firms ‘must be put at the heart of EU trade talks’

Theresa may

In a week that saw figures published showing a widening in Britain’s trade deficit in the first quarter of this year, FSB chairman Mike Cherry said: ‘As the next Government embarks on a post-Brexit global trade drive, small businesses should be front of mind.

‘Securing bold and ambitious free trade agreements with the EU and other priority countries will be critical to boosting UK exports, and we want to see a small business chapter in all future trade deals, dedicated to small business needs.’

Figures from the Office for National Statistics released on Thursday showed that sterling’s sharp fall since the EU referendum did little to boost exports in March. Meanwhile, industrial output dropped by 0.5 per cent for the month, sharper than the 0.3 per cent fall predicted.

And a Global Trade Barometer survey from money transfer group World First has shown a significant slowdown in international trading, as small and medium enterprises transferred on average 17 per cent less per currency transaction in the first quarter of 2017 compared with the final one in 2016 – a fall from £48,000 to £39,000.

It found 64 per cent of SMEs did not make a foreign currency transaction in Q1 2017, up more than double from 28 per cent in Q4 2016.

World First said a drop in SMEs’ confidence was compounded by currency volatility, with 30 per cent saying they felt the negative impact of exchange rate movements in the last quarter. One in five were worried about rises in inflation affecting their business and the same proportion showed concerns over a fall in consumer spending.

World First data also showed the popularity of currency hedging fell by 9 per cent in Q1 as fewer forward contracts were booked. Cook said: ‘The volatility of foreign exchange markets, combined with political and economic uncertainty, has made approaching foreign exchange with confidence even more difficult.
Many SMEs seem to be burying their heads in the sand. The lack of forward planning is leaving them susceptible to shocks that could have a significant impact on their bottom line.’

Cherry added: ‘Our research has revealed huge potential to double the number of SMEs exporting, if only the right practical advice and support is put in place. We’d like to see the Government explore financial incentives, like export vouchers or export tax credits.’