According to the latest Santander Trade Barometer the loosening of pandemic restrictions and the opening up of the UK economy have had an impact on business confidence which has now passed the 65 percent peak reached back in spring. Regional business confidence has bounced back too with all regions improving, except Scotland, which has dropped almost 10 percent and now stands at 64 percent.
The South West and Wales saw the biggest rise, up almost 15 percent since spring.
Businesses surveyed have now largely moved past the initial pandemic-driven slump, and performance is starting to recover to pre-Covid levels, with 43 percent reporting an improved performance over the last year.
Investment plans are also recovering, with almost half of businesses planning to hire new staff, a third planning to invest in R&D and over a quarter purchasing new equipment.
But despite the bounce back, UK businesses are bracing themselves for ongoing disruption to supply chains well into next year.
Over a third are anticipating the issues to continue throughout 2022, with the Barometer showing this is now the greatest challenge anticipated, followed by labour shortages.
Being able to attract the right staff is now seen by more than two-thirds of businesses as the single most important driver for growth going forward, more important even than the trajectory of the pandemic and the overall performance of the UK economy.
Industries facing the greatest challenge in retaining staff include agriculture, logistics and hospitality who have previously relied on workers from the EU.
A quarter of businesses are concerned about how Brexit has impacted their ability to get access to EU workers, up from 16 percent six months ago.
When it comes to overseas trade, a quarter of businesses say recruitment or access to the right skills are the biggest challenges they face.
Internationally trading businesses are more confident with 79 percent expecting growth over the next three years compared to 62 percent of domestic-only businesses. This trend also continues into performance.
John Carroll, head of international and transactional banking Santander UK, said: “Faced with supply chain disruption, labour shortages, rising energy and transport costs and a difficult winter trading season ahead, it’s reassuring to see UK companies continue to remain optimistic, with increases in both business performance and expected future growth.
“Providing they can attract and retain the staff they need to succeed, they see a big opportunity for expansion in overseas markets.
“International trade can play an important role in helping UK businesses to emerge from the pandemic and get back to growth and with the right support and partners, these internationally trading businesses can thrive.
“We’re here to help them with beyond banking support as they navigate the challenges.”
Business’ biggest concern about trading internationally in most regions of the world remains bureaucracy, followed by regulations post Brexit and finding the right partners.
But transport and shipping costs are rapidly catching them up. North America has extended its lead over the EU as the region is seen as offering the greatest growth opportunities during the next 12 months and on a country basis, the US leads Germany, China, France and Australia while Canada and India offer attractive growth prospects.
Brexit still remains a significant issue. The departure from the EU in January makes dealing with it more time consuming for 37 percent of companies, while the same proportion say they now have to pay higher charges, tariffs or local taxes as a result.
Businesses are more likely to report they are exporting less since the end of the Brexit transition period ‑ and not just because of Covid.
Sixty percent of international businesses which are selling less overseas blame increased costs, while 42 percent point to extra regulation in EU markets.
Looking at trade between Britain and the EU, 38 percent of international firms say the deal is ‘not sufficient’ for them to continue EU trade.
Almost a quarter of companies said the increase in costs and bureaucracy will prevent their business from continuing to trade, while 15 percent believe their supply chain will no longer be profitable as a result of the EU trade deal.
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