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The Office of National Statistics reported in July that the trade deficit widened to £8.9bn in Q2 2017, thanks to an increase in imports and a decrease in exports.
Our research suggests that the government is failing to get the message across: it is neither persuading the public that it wants to encourage businesses to expand overseas nor that Britain is open for business.
A reason why government is failing to convince domestic companies to become exporters is the perceived roadblocks in their way. These hurdles can include a lack of access to market information, a shortage of international touchpoints, insufficient access to finance and an unclear understanding of the role that companies play in their respective supply chains.
If the short term need is for companies to relocate in order to avoid falling foul of Brexit, the medium term requirement is no less urgent. Quite simply, British businesses need to remain relevant to both domestic and international customers; they can do this by identifying the need in other markets and shifting what they offer to match this need.
There is a danger that British companies might focus excessively on the immediate impact of Brexit and ignore other, arguably, more global factors. President Trump’s protectionist policies and their impact on global trade are a far greater concern to many.
Closer to home, Europe seems to have regrouped after the initial Brexit shock and pressure, though broader risks remain; the forthcoming elections in Europe will be the latest test of regional stability.
Looking further ahead, the very shape of business is changing. Disruption, both a buzzword and a threat, is now becoming the norm; companies driven by innovation are having a dramatic effect on how businesses achieve their growth.
For example, in the context of changing legislation, favouring the development of alternatives to diesel engines, Tesla’s expansion in Europe probably poses a much more serious long term threat to German automotive trade than Brexit does.
Faced with disruptive innovation, uncomfortable choices are becoming more apparent. Should companies adapt their business to supply more components to international markets, or should they investigate ways in which to support and be a part of innovation?
It is clear that scale-ups and smaller businesses looking to survive in the post-Brexit world should find ways to avoid or manage the seemingly inevitable bump in the road. A longer term view is required.