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The UK’s businesses are feeling more confident after a prolonged period in the Brexit doldrums, according to the ICAEW’s latest Business Confidence Monitor - but what’s behind the improvement and is it for real?
Despite only launching last year, British startup Rockit has moved quickly into export markets, recently signing distribution deals for its portable baby rocker, linking up with distributors in Poland, Czech Republic, Belgium and markets beyond Europe.
“Australia is our largest export market at present, New Zealand have stock and Rockits are on the way to Taiwan, Canada and Israel,” founder Matt Dyson told us. “We also have orders from distributors in the US, with Singapore, Japan and South Korea coming onboard imminently.”
It’s companies like Rockit, according to the ICAEW, which are feeling most bullish about the future. Since the referendum vote in June 2016, a confidence gap has emerged between companies that export and those that do not.
Of the businesses surveyed, exporters have seen stronger sales growth of 5.2%. “Given recent fluctuations in sterling however it will be significant if this improvement continues in the rest of 2018,” said Michael Izza, the chief executive of ICAEW.
Rockit’s founder Matt Dyson, however, remains confident. “The majority of orders from overseas distributors have come from outside the EU,” he told us. “There has been very positive feedback on the product from within the EU but orders have tended to be smaller and we sense that this is perhaps due to uncertainty post the referendum.
“What has been reassuring, is the fact that we are experiencing good export sales despite the tariffs imposed outside the EU.
“All in all we are very positive as we already have negotiated contracts with a number of distributors in Europe. There are plenty of other sales in the pipeline, with products currently being tested and contracts negotiated for Germany, Austria, Switzerland, Spain, Denmark, Sweden, Finland.”
Asked whether he expects European sales to increase once Brexit is done-and-dusted, Dyson was unequivocal: “We certainly envisage increased sales into Europe once the uncertainty is over.”
There’s no clear figure on how many British businesses export, but government data suggests that just over a tenth (10.7%) of SMEs are exporters. Drilling down deeper, it’s likely between around 5% and 8% of businesses export to the EU.
Uncertainty over the future still haunted the ICAEW’s results, however. Long-term investment is improving, but it remains modest. It’s a sign, said the ICAEW’s Izza, that businesses are focussed on the ‘here and now’. “Confidence is very fragile and the upward trend could be derailed by any setback in the economic outlook.”