Share this article

Michael McGowanIn the latest Bibby Blog, Michael McGowan, Managing Director for Foreign Exchange at Bibby Financial Services discusses the Government’s 2020 export target, concerns over the EU referendum and the impact of exchange rate volatility on SMEs trading overseas.

The Government’s target of increasing the UK’s exports to £1 trillion by 2020 is ambitious. This isn’t necessarily a bad thing: even the Minister of State for Trade and Investment Lord Maude admits that it’s a “big stretch”, but sees it as a useful reminder that the UK is punching way below its weight when it comes to exports.

In order to reach this target, the UK will need to increase its growth rate massively over the next five years against the backdrop of a world trade market that is currently shrinking. We also need to give SMEs enough confidence and support to expand overseas.

Our latest SME Confidence Tracker found that 70 per cent of UK SMEs neither export nor import, whilst only 9 per cent have any plans to invest in trading overseas in Q1 2016. Clearly British businesses need all the help they can get, especially SMEs, who make up 99 per cent of all UK business.

Referendum concerns

The upcoming EU referendum is a key concern for SMEs, and is driving confidence ever-downwards. Less than two-fifths of SMEs expect to grow this quarter and perhaps this is why businesses are shying away from the risk of engaging with the European market and volatile exchange rates that come with it.

Since joining, the EU has been a vital market for the UK’s trading activities, accounting for 45 per cent of all UK exports in 2014, a figure that has grown consistently since 1999. It is, therefore, natural that many SMEs are starting to fear the consequences of the forthcoming EU referendum, which could happen as early as June.

These fears include concerns over how currency volatility related to the referendum will impact businesses trading overseas.

Foreign exchange plays a huge role in the efficiency, accessibility and appeal of exporting. Exporting anywhere can leave a business exposed to currency fluctuations. When agreeing prices of goods, businesses need to consider potential future currency fluctuations which could result in the sale price decreasing by the time it comes to invoicing for the goods. Having access to expert advice on this and turning around payment quickly can be essential.

Introducing Bibby Foreign Exchange

With government and policymakers more motivated than ever to boost exports, this is an ideal time for Bibby Financial Services to launch our new foreign exchange offering to the wider market in the Spring.

At present, the process of expanding a business beyond the borders of the UK is often overly complex for many SMEs, with limited resource and experience of foreign exchange markets.

It’s for this reason that Bibby Foreign Exchange – which is now available to our existing clients – looks to remove complexities preventing many SMEs from engaging in international trade.

Combining funding with foreign exchange services is something other non-bank funders are simply unable to do and the ability for businesses to drawdown – in a currency of their choice – from existing funding arrangements, is a huge benefit.

To find out more about Bibby Foreign Exchange, email