16 Feb 2018
The number of Scottish businesses that currently export their goods or services has fallen to less than a third in the last six months, according to the latest Business in Britain report from the Bank of Scotland.
While only one in four (24 per cent) firms now say they have taken a strategic decision not to export, down slightly from 26 per cent in June 2017, the number that are currently exporting has fallen by eight points to 29 per cent, from 37 per cent last summer.
Across the UK, 40 per cent of firms now export, down only four points compared with six months ago.
Volatile currency rates were the biggest factor affecting firms’ decisions to trade overseas, with 26 per cent saying the biggest barrier to exporting is exchange rate uncertainty, followed by tariffs and quotas (cited by 10 per cent) and cost including transportation and port entry taxes (cited by seven per cent).
Looking beyond exporting alone, a net balance of 17 per cent of all businesses across Scotland also say the fall in the value of the pound is bad for the economy, while 20 per cent say it’s bad for their business.
The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, including 125 in Scotland, and tracks a range of performance and confidence measures.
However, it found that, among those that are already trading overseas, exporters in Scotland are buoyant about their 2018 trade prospects with a net balance of 17 per cent expecting overseas sales to increase over the next six months.
This is on the back of a strong end to 2017 in which a net balance of 19 per cent said their international trade had increased in the second half of the year.
While some are facing new challenges, with 25 per cent of Scotland’s exporters have decided to focus more on UK sales in light of Brexit, most are optimistic about what lies ahead.
Simon Quin, Scotland, area director for Global Transaction Banking, SME at Bank of Scotland, said: “The majority of Scotland’s exporters still see international trade playing an important role in their plans, despite the continued climate of domestic and international uncertainty.
“Judging from Scottish firms’ export performances over the previous six months, this confidence is not misplaced and by using internal trade as a growth strategy for their business British firms can also manage risk during periods of uncertainty.”
Based on their current overseas trading, the current most popular partner countries for Scottish exporters are the USA with 17 per cent and Brazil, China, France, Germany, Ireland and Norway, all with eight per cent of exporters respectively trading with these countries.
The country exporters in Scotland see as their biggest opportunity for international trade is China (25 per cent), followed by the USA (22 per cent) and Germany (eight per cent).
Simon Quin added: “The fact that Scottish exporters see China as offering the biggest opportunity in future shows that they are looking to pre-emptively tackle the impact of a potential loss of access to the EU single market.
“Trading overseas can feel intimidating, but with Scottish food and drink in particular enjoying an enviable reputation across the word, and the fact that the fall in the value of the pound makes a lot of British exports more attractive overseas, it’s clear there are opportunities for Scottish exporters to prosper globally with the right support.
“The Bank of Scotland is here to help, and our strategic partnership with the Department for International Trade as well as teams of Scottish-based relationship managers can provide the kind of insight, support and introductions that can be invaluable to firms setting out on, or expanding, their export journey.
“To support customers further we also provide access to our International Trade Portal which helps both current and prospective exporters understand the best market for their product or service, the trading requirements and conditions for that market, as well as buyers or suppliers they may wish to work with the Bank of Scotland can also help customers manage other risks associated with international trade, for example foreign exchange risk. It’s a big step in the right direction to help new or experienced exporters navigate the sometimes tricky international trading waters.”