18% of exporters diverting trade away from the EU.
One third of exporters still plan to trade with new markets
British businesses are creating a new trading footprint around the world, according to a new report, A
As the
This is driven solely by Brexit uncertainty as those diverting trade beyond the EU have primarily opened up trade relationships with established emerging markets within the BRICS (
Separate polling of 1,200 British businesses undertaken in October for the report finds 24% of all
'While the clock is counting down to the end of the
The report found plans are underway for further expansion beyond the EU. According to the polling, a third of exporters (34%) and one in six (16%) of all businesses plan to expand into new markets around the world. It also highlights business continuity plans, with 17% of exporters and 13% of all businesses saying they are stockpiling to ensure continuity of service post Brexit.
The biggest shifts in trade diversion were by firms who export the least, which switched as much as 46% of new export growth to non-EU markets. For the next quartile up, this figure was 19%. Yet the analysis found that it was primarily firms who have the highest export values which were benefiting from the changes.
The research suggests that in some cases they might have taken the place of those trading less - potentially due to their ability to better manage, absorb and diversify the potential risks of a post Brexit world, and the likelihood that they are highly productive firms which export multiple products or services. This is shown through the increase in growth in export values towards both intra and extra- EU countries despite there being a slow down of the exporting of new products and destinations within the EU as a whole.
'The shift in diversion we found goes against conventional 'trade gravity' models, in which countries geographically close to each other tend to do more trade. Instead from the referendum through to today we see exporters exploring new trading partners around the world. Our concern lies with the vulnerabilities faced by businesses that export less, forging these paths while lacking the infrastructure and scale of multinational firms as this reverse in trade gravity typically means higher costs and greater risk exposure. More needs to be done to help British businesses of all sizes navigate the future of international trade.'
While evidence suggests trade diversion is already underway and British businesses are preparing for the unknown, insights from key business leaders tell us that there are still many key lessons to be learned. Mitigating risks, managing overseas expansion and building understanding and awareness are all central to the success of opening up new trading opportunities beyond the EU in our post Brexit world.
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