Central South businesses eye overseas expansion, despite current trading conditions

3 November 2020 

Central South businesses eye overseas expansion, despite current trading conditions

The onset of a pandemic and the uncertainty surrounding Brexit have understandably hamstrung a lot of businesses when it comes to overseas trading. Yet, the mood in the Central South is somewhat different. As a natural gateway to international trade, it’s hardly surprising that businesses in the region are taking a different tack when it comes to future growth. 

Our monthly Rethinking the Economy survey has revealed that an overwhelming 90% of businesses surveyed in the Central South are still going ahead with plans to expand overseas in the next six months, despite current trading conditions. A further 3% plan to grow their international presence, but have delayed this due to the pandemic. 

Overseas trading is clearly in the life-blood of Central South businesses. Home to two major ports, the region has a strong track record when it comes to cross-border trading and it is fundamental to the success of the local economy. 
Brexit high on the agenda in the Central South 

According to Department for International Trade, approximately 90% of global economic growth in the next 10 to 15 years is expected to be generated outside the EU. This fact is not lost on businesses within the Central South region. 

However, the issue of Brexit has undoubtedly added a layer of complexity to overseas plans and preparation is key. As we enter the final few weeks before the UK’s transition period ends, only a third of businesses in the region have put a Brexit strategy in place, with a further 27% delaying plans due to the pandemic. It’s little wonder that the UK’s withdrawal from the European Union has become an overriding concern for Central South companies, particularly those with such an appetite for overseas growth. In fact, when surveyed recently 80% of Central South respondents said a no-deal Brexit posed a bigger threat to their business than the current domestic second wave of COVID-19. 

While the new border operating model, which was published by the government in July, has added some clarity, in terms of how goods are going to be controlled at our borders once we leave the EU, what is clear is that businesses need to prepare for a significantly higher level of customs declarations and associated administration. It candidly states ‘customs declarations are complicated’.

According to Chamber Customs, declaration volumes will grow from 55 million to almost 300 million next year, with the cost to business estimated at around £7 billion per annum. The challenges facing Central South businesses, as we exit the EU, are clear to see, but so too is the ambition and intent.

The digital economy 

The growth of the digital economy and trade in services is making the world smaller than ever and, despite the obstacles that have been put in place in 2020, the opportunity to expand overseas has never been greater. However, there are some key considerations to be made if crossing the border is going to be a successful. These include cultural differences and whether the demand is there within local markets for products or services; legal and regulatory barriers; foreign government stability and infrastructure; as well as having a strong business case to enter new markets.

As a whole, the South East region saw the largest increase in exporting businesses in 2019, up 3.2%, according to HM Revenue & Customs, with the value of UK exports in goods greater than any other region in the UK. 

With a diverse economy covering marine, aerospace, security, creative, environmental, biotech / healthcare, space and advanced engineering, the Central South is well placed to navigate the current challenges and realise its overseas ambitions in the coming year. 

If you want to discuss your international expansion plans please contact Matthew Sewell or Arbinder Chatwal.

 

 

 

 

 

Matthew Sewell 

Tax Partner

BDO Bristol - Bridgewater House

BDO Southampton

07971 761 818

[email protected]

 

 

 

 

 

 

Arbinder Chatwal 

Partner

BDO Southampton

023 8088 1700

023 8088 1940

[email protected]

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