South: 82% of UK companies see US as top trading partner
Research conducted ahead of Brexit by the Economist Intelligence Unit on behalf of American Express shows that 82% of British companies consider the USA their top trading partner ranked by revenue. This was followed by domestic trade within the UK, with trade with Mexico and Canada taking joint third place.
The research, which included a survey of 531 companies worldwide, explored global trading relationships. It looked at how companies trade, the challenges they face and how they expect international trade with the US to change based on recent trends and upcoming political and regulatory shifts.
The research found that British companies are highly optimistic about trade growth with the US. 48% of UK respondents anticipate that trade with US will grow by more than 10% over the next five years.
While 8% of British companies anticipate a general decline in overseas trade over the next five years, only 2% expect trade with the US to decrease in the same time period. Against this backdrop, British companies were broadly satisfied with the quality of trade related infrastructure in the USA, and 54% of respondents stated that trade infrastructure was either very good or excellent.
A number of specific pain points were, however, identified. Globally 41% of respondents ranked exchange-rate volatility as their most significant challenge when trading with the USA and the corresponding figure for the UK (ahead of the UK referendum) was 42%.
While UK trade is balanced equally between goods and services, transportation costs and delivery delays in the US are a significant issue for 36% of British companies who say they rely on a fairly even combination of road, air and rail for transporting goods between the two countries.
Third in the list of challenges posed by trade with the US, and most surprising, given the clear advantage of doing business in the same language, was the fact that 30% of companies listed insufficient market knowledge as a barrier to trade.
Trade regulation, which was an issue for the vast majority of countries surveyed, was not a significant cause for concern amongst British businesses, and was mentioned by only 14% of respondents as a trade pain point. However, costs associated with these changes have had a clear impact, with 70% of UK companies saying they have seen an increase in the cost of doing business with the US because of trade-related regulatory and compliance activities.
The final most pronounced pain point for companies in the global survey related to payments. 32% of respondents cited making payments as among the top challenge, with issues chiefly arising from currency fluctuation, process inefficiency, limited payment visibility and bank fees. Within the UK, making payments was mentioned by only 26% of companies as a challenge, and 28% of respondents said there was a shortage of external finance available for trade with the US. Other obstacles to accessing finance included lack of dollar liquidity and high transaction costs, which was mentioned by 20% and 16% of respondents respectively.
Jose Carvalho, senior vice-president of American Express global commercial payments for Europe, commented: "It is hugely encouraging to see the US as a major trading market for British companies, with the appetite continuing to rise year on year."
