Over half (52%) of UK businesses are prioritising international trade as a key growth driver, according to the Santander Trade Barometer.
This marks a 5% rise since spring 2024 and more than double the 21% recorded by Santander in 2021, reflecting an ongoing trend seen since the Barometer’s inception in 2017.
A further 39% of businesses not currently trading internationally said they were considering expanding abroad, with companies increasingly looking to overseas markets for growth and resilience amidst easing domestic and global challenges.
Notably, UK businesses already trading internationally are targeting high-potential markets like Australia (46%), Japan (28%) and Nigeria (10%) for future growth, with these regions showing the largest positive shift wave-over-wave.
Meanwhile, established trade partners like the US (35%) and Canada (21%) continue to hold strong appeal.
Despite these changing horizons, markets like the EU remain essential, with 49% of businesses still identifying the EU as a key region in which to base their supply chains.
This diversification in trading partnerships illustrates a strategic approach by UK businesses to mitigate risks and expand into high-growth areas globally.
Jane Galvin, head of corporate clients, Santander UK, said: “With income and productivity growth in the UK remaining sluggish since the financial crisis, unlocking international trade opportunities for SMEs can be a catalyst for domestic economic growth.
“The latest Barometer underscores the dynamism and adaptability of businesses venturing abroad, underscoring how international trade can provide a vital buffer against domestic slowdowns and access to higher growth economies.
“The government must ensure it is unlocking growth at home by empowering SMEs to explore opportunities provided through global trade.”
Easing domestic and economic pressures
The report reveals a growing sense of optimism, with 36% of businesses feeling ‘very confident’ about their future growth, up from 30% earlier this year and from just 22% a year ago – a rise of almost 15%.
This shift reflects more positive expectations as global inflationary pressures gradually decline. The IMF projects global inflation to drop to 3.5% by the end of 2025, contributing to greater economic stability following its peak at 9.4% in 2022.
Inflation, which has been a significant headwind for businesses throughout the past year, is now seen as less of a threat, with only 43% of businesses identifying it as a risk – down from 48% in spring 2024.
Less than a third (29%) view inflation as a risk over the next one to two years, signalling a growing sense of stability.
However, underlying cost pressures remain significant, with over a quarter (27%) of organisations pointing towards slow economic growth and sluggish expansion in core markets (24%) as the greatest risks for their business growth in the current market environment.
Concerns about business taxation have also increased, with 22% of businesses identifying it as a top concern, up from 18% previously.
Technology and AI: leading the charge in innovation
The tech, media and telecoms (TMT) sector shows exceptional optimism, with 90% of businesses in the sector expressing confidence in three-year growth prospects.
This outlook is largely supported by investments in artificial intelligence (AI), machine learning and cybersecurity. This is a significant jump compared to other sectors, underscoring the tech industry’s robust outlook and growth potential.
Over half (54%) of UK businesses view AI as a crucial opportunity to bolster productivity and profitability, with larger businesses focusing their investments on cutting-edge technologies, prioritising machine learning and AI (32%), automation (32%), and cloud technology (31%).
In contrast, small and mid-sized companies are prioritising staffing needs (30%) as their main investment focus.
Overall business confidence in London is strong at 73%, and the proportion of ‘very confident’ businesses is notably higher in the tech sector than in other regions.
London’s position as an international tech hub continues to attract global companies and talent, reinforcing its role as a critical centre for innovation and growth in the digital economy.
Supply chain resilience
In an era of geopolitical uncertainty and potential supply chain disruptions, UK businesses are prioritising resilience and adaptability.
Strategies such as ‘nearshoring, reshoring and friendshoring’ are gaining traction, with 21% of businesses already taking action to relocate their supply chains closer to home.
This strategic shift aims to mitigate risks associated with long-distance shipping, geopolitical instability, and over-reliance on specific regions.
While China continues to be a significant player in global supply chains, with 41% of UK businesses reporting dependencies there, concerns over geopolitical risks and logistical challenges are prompting a reassessment.
Businesses are actively pursuing diversification strategies to reduce their reliance on any single source and build more robust and adaptable supply chains.
Gareth Thomas, minister for exports, said: “Opportunities exist around the world for UK businesses – from our closest neighbours in Europe to some of the fastest growing markets on the other side of the globe, as is demonstrated by Santander UK’s latest Trade Barometer report findings.
“We’re on hand to help businesses take their first step on their exporting journey, or supercharge existing international operations with our supply chain support and network of expert international trade advisors.”
The Autumn 2024 Santander Trade Barometer is available to download here.
