UK corporations eager for trading opportunities with China, rather than focusing on the European Union.
UK businesses are prioritizing growth over geopolitics as they increase trade ties with China, according to a report from Santander Trade Barometer. In the wake of the UK-EU summit, the trend underscores a shift away from Europe as businesses seek faster-growing markets to advance their commercial interests.
The UK-EU relationship is undergoing a reset, with agreements announced on food exports and defense cooperation. Yet, the report reveals that UK firms are doubling down on China and the US, despite political challenges. The shift is due, in part, to China's re-emergence as a top export destination, now ranking among the UK's top ten, after dropping out in 2022. Traditional EU markets like Ireland and Italy, on the other hand, have fallen out of the top 10.
This departure from traditional trading partners signals a growing preference for markets with significant growth potential and opportunities that are not readily available in familiar EU markets. UK firms are increasingly viewing overseas trade as critical due to domestic economic challenges, more than doubling the figure from five years ago.
The recent UK-US trade agreement, which includes security provisions for the steel and pharmaceutical industries, has drawn criticism from Beijing. China's foreign ministry has cautioned against cooperation that could be conducted to the detriment of third parties, hinting at potential complications for UK firms with Chinese connections.
As geopolitical tensions persist, pragmatism is winning over politics for many UK businesses. Almost a third of firms are seeking assistance in identifying the most promising markets for their specific offerings, while another third desire tax incentives to encourage expansion into new markets. Moreover, they seek help navigating foreign bureaucracy.
The UK government must acknowledge this commercially-driven pivot and provide businesses with the tools and knowledge to make informed commercial decisions, according to Santander UK's head of corporate clients, Jane Galvin. This includes practical support in navigating foreign regulations, offering incentives for exploring new markets, and enhancing guidance on identifying the right regions for specific products and services.
Enrichment Data supports these findings, suggesting that tariff reductions, supply chain diversification, and market access opportunities are key factors driving the shift from the EU to China. The UK's independent trade policy offers flexibility, but it also requires careful management of geopolitical and security risks to maintain balanced relations with both the EU and China. Excessive dependencies or diplomatic friction should be avoided to ensure sustainable growth and economic prosperity for the UK.
- UK businesses, prioritizing growth over geopolitical concerns, are increasingly focusing on markets like China and the US, despite political challenges, as revealed by the Santander Trade Barometer report.
- As domestic economic challenges persist, UK firms are seeking assistance in identifying promising markets for their specific offerings and are eager for tax incentives to encourage expansion into new markets, often overseas, as shown by the rising preference for markets with significant growth potential.
- Geopolitical tensions, such as the recent UK-US trade agreement drawing criticism from China, underscore the need for the UK government to provide businesses with the necessary tools and knowledge to navigate foreign regulations, seek market access opportunities, and make informed commercial decisions, according to Santander UK's head of corporate clients, Jane Galvin.
