UK trade is set to grow in the Asia Pacific and South America explains Sarah Burkill, director of working capital solutions, Wyelands Bank
While trade is important to the UK economy, knowing where to trade is a more complex consideration.
To help answer this question, we commissioned research with Global Trade Review, the trade and trade finance media company, to better understand the role of imports and exports in the UK today.
The research reveals a number of interesting points.
Probably unsurprisingly, Europe remains the UK’s biggest trading partner for exports with a 46.3% share. North America is next with 17.2%, followed by Asia Pacific (7%), Sub-Saharan Africa (5.4%), Mena (1.8%) and South America (1.2%).
The UK’s fastest growing export partners are dominated by countries in Asia Pacific with three in the top five; Europe and the Middle East also rank with one each.
Exports to these five countries were worth US$71bn last year. The projected growth means that these markets could generate an extra US$2.1bn a year for UK exports.
The fastest growing market is Asia Pacific, where exports are expected to grow at 3% a year to 2021. South America, where UK exports are expected to grow by around 0.5% annually until 2021, is the second fastest growth region.
The UK economy is one of the most open countries in the G20 when it comes to trade, and more open than China, America and Japan. Trade accounts for 58% of UK GDP and in 2016, the UK exported goods worth US$433.5bn and imported goods worth US$678.1bn.
The research also revealed that more than twice the number of UK small and medium sized enterprises (SMEs) trade internationally than previous figures estimate.
The analysis shows that 30 per cent of SMEs are now trading internationally in comparison with 12.9 per cent, a figure generated from a government survey conducted in 2016.
This is important, there are some 5.7 million businesses in the UK and 99.3% of these are small or medium-sized enterprises (SMEs), contributing £1.9 trillion to the UK economy, 51% of all private sector turnover in the UK.
More than this, SMEs employ 16.1 million people – accounting for 60 per cent of all private sector employment in the UK and are a source of innovation and entrepreneurialism.
So, in economic terms, SMEs punch above their weight.
Sectoral analysis of businesses trading internationally provides some interesting insights, the largest contributor being professional and business services with some 26 per cent, quickly followed by 24 per cent of manufacturers. In addition, some 10 per cent of retail and wholesale companies have international turnovers, as well as 9 per cent of ICT companies.
Smaller, more innovative companies – especially in manufacturing – play an important part in the UK’s foothold in global supply chains.
Despite the strong performance of SMEs, many struggle to access funding. In order for SMEs to continue to succeed, they often need working capital solutions that support both their buying and selling power.
It is only by providing simple, flexible funding and much needed working capital solutions that we can support SMEs to trade, grow, create jobs and take advantage of the growing markets in Asia and beyond.