New research from the Grant Thornton International Business Report (IBR) has uncovered an unprecedented boost in plans to increase exports, driving levels of business optimism to record highs. The growth in business optimism is particularly high in Europe, with UK optimism the highest at 80%, albeit down 3% on last quarter, and seems to be driven by increasing export growth expectations. The findings highlight the ongoing need for policymakers to work together to lower trade barriers and foster business environments which encourage cross-border activity and bolster the global recovery.
Simon Bevan, Partner and Head of China Britain Services Group, at Grant Thornton UK LLP, commented: “The widespread expectation for export growth is welcome as it is feeding levels of business confidence we have not seen in more than a decade. As the UK continues to recover from the financial crisis, business leaders are sensing real opportunities to go overseas and capitalise on other markets. These are exciting times for business leaders, and the focus on exports is a clear sign to policymakers that cross-border trade is critical to the long-term health and success of their operations and the wider economy.”
Expectations for increasing exports in the EU were particularly strong (31%) with UK businesses growing in confidence over the quarter, up 9% to 34% . However, as noted in our Agents of Growth report, they still fall behind other, more troubled European economies such as Turkey (40%), Spain (40%) and Greece (38%), showing there is still a way to go if UK business is not to be left behind.
Simon Bevan added: “Exporting is a particular focus for Europe at the moment and it's great to see confidence and enthusiasm for exports growing amongst UK business. That this still lags behind some European counterparts causes concern, as does the propensity for UK business to 'play it safe' with the vast majority exporting to the traditional but lower-growth markets of Western Europe and North America, potentially missing out on the higher growth, developing markets.
"For policymakers, the message is loud and clear that businesses need to be able to export in order to fuel growth and recovery. Export subsidies, a reduction in red tape and greater support to firms looking to export more are all tools that can, and should, be deployed where possible to support cross-border trade. Some good progress has already been made with positive announcements from UKTI, and hopefully there will be more to come"
The IBR has found that globally, business optimism has risen to net* 46%, a record high. The surge in optimism is being driven by increasing confidence in the European Union (at 43%, the highest since 2006), North America (at 73%, the highest since 2004) and the G7 (at 53%, another record high). This positive sentiment about the economic outlook is being fed by record-high expectations over exports; globally the proportion of businesses expecting exports to increase over the coming 12 months (24%) has only been equalled once before, in 2011. In the G7, a record 23% of businesses expect to grow exports over the next 12 months.
*Net optimism refers to percentage of optimistic businesses less percentage of pessimistic businesses