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Untapped SME trade has potential to generate £290 billion annual post-Brexit boost to UK economy
SMEs have potential to power an ambitious and vigorous post-Brexit UK economy, reveals new research from Sage and Capital Economics today.
Capital Economics’ analysis identifies significant untapped trade potential within the UK SME community. 375,000 SMEs have exportable products and services but are not currently exporting. If all 375,000 businesses began to trade internationally, Capital Economics estimates the economy would see a rise in export revenues of £290 billion each year – almost half the value of the trade agreement between the UK and European Union (EU).
Unlocking just 10% of this potential could add £29 billion per year to export revenues, supporting around 215,000 direct jobs and 50,000 additional jobs in the professional and scientific sectors alone. The sectors with the greatest opportunity to grow the number of exporting businesses are in information and communication, agriculture and manufacturing as well as professional and scientific services.
In response to the economic effects of COVID-19 many SMEs have turned to international trade, with 67% of SMEs either taking or considering measures to increase their revenue through exports in new markets according to polling in December 2020. At the same time, a wave of accelerated digitisation is helping simplify access to new markets and reduce trade complexity.
Sage is calling for the Government to introduce a new SME Trader Support Service, which will support SMEs’ appetite to trade and build business confidence to export. Additional measures the Government could introduce include providing financial incentives to adopt new tech tools, expanding digital adoption among the business community and building resilience into the fragile recovery.
These figures show that should UK SMEs take exportable products to international markets, it would generate a significant boost to revenues and drive a thriving post-Brexit economy. Stimulating investment in technology would help more than 50% of SMEs access new international markets, as the application of digital technology helps businesses looking to export. For example, e-commerce and digital marketing platforms enable SMEs to reach new customers overseas and accountancy software platforms reduce complexities when invoicing in multiple currencies.
The existing Trader Support Service, which helps move goods between Great Britain and Northern Ireland, can complete declarations on businesses behalf and navigate any changes in the rules. The expansion of this service and the creation of an SME Trader Support Service could give SMEs the confidence to trade globally knowing they have access to free support, while giving them sufficient time to learn the rules of international trade and eventually trade independently.
Paul Struthers, Managing Director, UK and Ireland at Sage, said: “This is a once-in-a-generation opportunity to accelerate the performance and reach of the UK’s economic backbone. Navigating through a third national lockdown, SMEs continue to diversify, digitise and look to new markets. All of which will generate new jobs and power a strong recovery.
“We are at a major turning point for the UK economy on the global stage. But, we need to move quickly to give SMEs the confidence to capitalise on the trading opportunities after Brexit – incentivising digitisation to give businesses the platforms to serve customers across the globe. Today’s research provides a strong basis for the expansion of the Trader Support Service and creation of a SME Trader Support Service, which will help unlock the incredible export opportunities among the SME community.”
To download the Capital Economics summary report, visit here.