New data has revealed the extent to which UK SMEs depend on European trade relationships, which those who warn against a British exit (or ‘Brexit’) from the European Union will say gives credence to their argument. This research coincides with Export Week, aimed at those looking to increase their business overseas and those exporting for the first time.
Analysis of the activities of more than 5,000 World First small business clients shows that over £198m was transacted into Euros during October, up 59% on September alone. By comparison, just over £7m was sold into Chinese yuan.
The data also shows that both China and Europe have experienced an upsurge in trade with UK based SMEs over the last twelve months. Trade between the UK and China has grown rapidly with a year on year increase of 238% in SMEs selling sterling for Chinese yuan compared with a 107% increase in the EUR bought from GBP over the same period.
Taken together this data suggests that while China remains an important growth market, the economic bloc of the European Union remains the cornerstone of UK SME trade. The data also reveals that in the face of a slowing Chinese economy, ongoing Eurozone uncertainty and a strong pound, the UKs SME sector continues to show growth whilst some bigger businesses struggle. Just last month luxury fashion giant blamed a failure to hit first-half expectations on a combination of currency volatility and China.
That Europe remains the heartland for small firms with international aspirations is a message that we are likely to hear time and time again in the lead in to the EU referendum before the end of 2017. The Britain Stronger in Europe Campaign, led by Stuart Rose, will no doubt cling to such evidence as they bid to convince voters that the interests of Brits and British business are best served by remaining in the European Union.
In the meantime, what is clear is that with volatility present in both the Eurozone and China, SMEs should be alive to the opportunities and threats posed by currency movements. Just last week (w/c 2/11/15) we saw increased activity from UK SMEs reacting strongly to GBP trading above the €1.40 level for the first time since mid-August.
Right now, for businesses with a global outlook, a solid currency strategy could offer some certainty during uncertain times.
World First can help individuals, small businesses and online sellers save money when making international payments or bringing back money earned overseas. Get in touch to find out more.