Since the recent UK’s humiliating election result, much speculation has been made regarding the impact on the UK economy specifically – or I should say exclusively – the Financial Sector. You can’t miss the endlessly inventiveness marketing actions developed by the major capital cities in the EU Zone, all looking to attract banks, investment funds, insurance companies, Fintech’s or Real Estates.
It is true that the Financial Sector contributes over £190bn! to the UK economy (12% of the country’s GDP). £190bn is indeed a nice budget which arouses keen interest among the EU leaders………But who is really talking about the Small and Medium-sized Enterprises (SME’s) value of trade in the economy? How much is UK-EU trade worth to each party?
Below is a brief reflection to understand why every growth strategy in the EU should present a compelling proposition addressing the UK SME’s.
According to UK data (ONS), around 44% of British exports in goods and services went to the EU in 2016. It means a total of £240bn! (2013: £228bn, 2014: £229.9bn, 2015: £230bn). Actually, UK-EU exports are the biggest part of the UK’s economy. It clearly means that the EU markets are surely to remain very attractive to UK companies even they may look to other markets that could offer new opportunities for growth.
Where do the UK exports to the non-EU currently go? (Source: HSBC, 2016)
|Hong Kong:||£5,730m (£5.73bn)|
|South Korea:||£4,975m (£4.97bn)|
|Saudi Arabia:||£4,276m (£4.28bn)|
The numbers above could maybe look promising for some Brexiteers but a recent research (Source: Economia) told that the UK businesses are “highly skeptical” about the potential to replace the current free access to the EU market with growth elsewhere. A global review has never been more important for the UK’s SMEs. The UK’s decision to leave the EU has shaken economic foundations but, despite the uncertainty it has caused, it has also provided an opportunity to reassess how to generate growth. Brexit could finally well act as a catalyst for forging new stronger trading ties with the EU. The outlook for the number of SMEs exporting is actually encouraging. When SME’s surveys asked whether they had plans to export through the EU in the future, most of them said they plan to continue exporting or licensing their goods or services outside of the UK within the next 12 months. So, considering that all of them are probably concerned about the potential impact of increased tariffs, non-tariff barriers and customs controls -should the UK leave the single market- we can reasonably say that there are excellent cards to play for EU countries offering an attractive rewarding fiscal environment associated to a very good time & cost effective supply chain management.
Should I confirm again that Luxembourg, located in the heart of Europe, is ideally positioned to play a significant role of excellent international developments for the UK?
Let’s be ready to continue adapting our business to ever-changing situations politically……
Philippe Johan Castelain
Managing Director@Lys Trade