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A survey by British Chambers of Commerce, in partnership with DHL Express UK, has today revealed that almost half - 49% - of businesses have uncertainty over Brexit front of mind when deciding whether to trade internationally, highlighting the economic cost of the persistent lack of political clarity.
A similar number (48%) of firms are concerned by the related issue of exchange rate volatility, which can increase the cost of raw materials and potentially make UK exports less competitive. Exchange rate volatility is a much greater concern for manufacturers (61%) and B2C firms (64%) than B2B businesses (36%).
As EU leaders gather in Brussels, the BCC today brings together 500 exporters, trade professionals and business leaders from around the world at the BCC International Trade Summit to discuss the issues and trends at the forefront of international trade, and to give innovative firms the tools they need to enter new markets.
The research also shows that while there are many concerns for businesses when deciding whether to trade internationally, those that do trade internationally are more likely to be innovative within their business - 65% of those that are internationally active have launched a new product or service in the last 12 months, compared to just 41% of firms who are UK-focused.
Government must do more to boost business confidence at the Autumn Budget and incentivise export and import growth. This, coupled with clear progress in negotiations, will encourage firms to take risks and break into new markets, boosting innovation and productivity in the UK economy.
Commenting on the results, Dr Adam Marshall, BCC Director General, said:
"Firms have been dealing with uncertainty over the future relationship with the EU since the referendum vote over two years ago. However, this survey shows that as we get closer to the crunch, the lack of precision is starting to have a material impact on their decision-making.
"While business faces uncertain times, our research shows that businesses who do trade internationally are more innovative and dynamic compared to those who just focus their attention on the UK market. It is vital that clear progress is made in negotiations - to give firms confidence and empower them to take risks and try to break into new markets, creating the Global Britain this government so often talks about.
"At our International Trade Summit, we will hear from trade experts and dynamic businesses - as we look to help build connections and encourage firms to unleash their potential. Chambers of Commerce work day in day out to support businesses trading internationally, but we also need the government to step up and provide clarity now or put British competitiveness at risk."
Shannon Diett, VP of Marketing, DHL Express UK, added:
"The uncertainty expressed by British businesses taking part in this survey mirrors the increasing concern we are hearing from our customers, both of which further highlight the criticality now surrounding the Brexit negotiations. It is important to note however, that increasing the number of markets a business trades with helps to reduce risk and increase the opportunities for growth.
"It is imperative that decisions are made to allow businesses to plan for a successful Brexit and to facilitate continued smooth international trade with Europe.
"At DHL Express we are preparing for every scenario and as part of this we are reviewing resources, infrastructure, systems and people. We are joining forces across the DHL divisions to do everything within our power to ensure our customers can continue to operate and trade internationally in the smoothest way possible."