The UK government may be celebrating favourable tariffs with the USA and new trade deals with countries outside the EU, but the vast majority of UK small businesses are now focused on the domestic British market to secure growth over the next 12-months, according to new research from Novuna Business Finance.
The nationally representative survey of 1,000 UK small businesses asked business owners which, if any, countries offered them potential for trade and business growth over the next year. Tracking the annual results over the last eight years, since 2017.
The percentage of UK small businesses looking to open up new markets and growth opportunities within the UK has risen sharply from 64% in 2017 to a record high of 84% this year. The sectors where small businesses say they are most reliant on the UK market to secure future growth were agriculture (97%), construction (96%) and hospitality (87%).
Interest in expanding into the USA, stable for five years at 16% has fallen back to 12% this year – an eight year low, and well below its 22% peak at the start of 2020.
The EU was for many years a significant growth market for UK small businesses – but this has also fallen significantly from 24% in 2017 to just 17% this year. Small businesses in the manufacturing sector were the exception – here 24% of enterprises were looking to find ways to do more trade with the EU market.
Interest in doing business in European countries outside the EU has halved over the same time period – down from 12% to 6%.
Nationally, there are no overseas countries that have seen a rise in the percentage of UK small businesses that are looking to expand and secure growth opportunities. The regions where small businesses were most reliant on the domestic UK market for growth comprised of: Yorkshire and Humberside (92%), the West Midlands (92%) and the North East (86%).
London was the exception to the rest of the UK. The Capital had the lowest percentage of small businesses (77%) relying on the UK market for trade. London small businesses were also the most likely in the UK looking to open up growth opportunities in the USA (31%) and the EU (25%).
Scotland emerged as an enigma: Despite widely held pro-devolution and pro-European sentiments, 85% of Scottish small businesses were looking to secure growth in the domestic UK market – and they were below the national average when it came to looking for growth opportunities in the EU market (15%).
Jo Morris, Head of Insight at Novuna Business Finance said, “These new findings are possibly a consequence of the frustrations many small businesses have felt, following major political shifts over the last eight years.
“Our research in June 2017 revealed dismay over Brexit, with nearly a third of small business owners (31%) saying they wanted a new government that would reverse the Brexit decision.
“Forward wind to the start of 2025 and our Business Barometer survey revealed that more than seven in 10 small businesses (77%) said they were fearful that policies from the new US administration could have an adverse ripple effect on the outlook for small businesses here in the UK. Our new findings see this playing out, with a growing number of small businesses looking to the local UK market to deliver their aspirations for growth and expansion.”
“In recent months, the UK government has heralded a string of so-called ‘historic’ trade deals with India, the United States, and the European Union.
“Our data questions whether this will deliver an uplift in confidence for UK small businesses, at a time when their growth forecasts are falling each quarter. Small businesses dislike uncertainty, and with the Autumn Budget approaching, many enterprises will be hoping for a Budget that is good for business.”
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