BDO international liaison partner, Kim Hayward says that despite uncertainty being the ‘new normal’ now is still a great time for UK businesses to thrive overseas and for international firms to do business in the UK.
With Theresa May surprising the nation last month by announcing a snap General Election for the 8th June, it seemed to cement the notion that uncertainty is the new normal.
Brexit, the election of Donald Trump, a potential Scottish referendum and now a UK General Election all point to the fact that political upheaval is the trend of the moment.
One thing that has been reassuring throughout all of this is the pragmatism of businesses. In my day-to-day work with UK and international entrepreneurial businesses there has been a palpable sense of them just rolling up their sleeves and continuing their growth plans.
And why not? The fundamentals of the UK economy are sound, international markets are growing and now is still a good time for UK businesses to be expanding abroad and foreign businesses to invest in the UK.
Let’s look at some of the recent data that BDO has produced that backs up these points.
First of all British entrepreneurial mid-sized businesses have shrugged off Brexit uncertainty by growing faster than their German, French, Spanish and Italian counterparts over the last 12 months. There is no reason to assume this won’t continue despite the additional layer of uncertainty caused by a new General Election.
The longer term trend tells a similar story. Over the last five years the UK’s mid-sized businesses have grown their revenues by 34.7% just a shade ahead of Germany at 34.6%. The equivalent businesses of France, Italy and Spain grew revenues 20%, 16% and 12% respectively over the last five years. British businesses are leading the way in an environment where international counterparts are also growing. A good place to be.
British mid-sized businesses are also the most profitable across the top five EU economies generating profits of £97bn (profit growth of 19% in one year) compared to Germany’s £67bn (up 2%), France’s £62bn (25%), Italy’s £35bn (4.7%) and Spain’s £22bn (a contraction of -10%).
So our engine of the economy – high growth and entrepreneurial mid-sized businesses – is leading the way in the UK and across Europe. Despite all the uncertainty of the past twelve months these companies have taken calculated investment risks and prospered.
While a growing and dynamic economy in the UK will be attractive to investors, there are still areas that must be improved to ensure a successful post-Brexit economy. Our ‘New Economy’ report calls for the Government to adopt a radical simplification of the UK tax structure (aligning Income Tax with National Insurance and a moratorium until 2020 on any new tax changes unless they simplify the system) and for investment in smaller ‘shovel-ready’ infrastructure projects.
And to help international businesses navigate the UK economy we have just produced ‘Business in the UK – A Route Map’ – a guide providing advice and information to business owners just starting out in the UK or more established businesses looking to invest here.
It includes an introduction to the UK as a location to invest, its key sectors, infrastructure and skills; advice on the choice of business structure; business finance, key regulatory requirements and more.
So despite all the uncertainty the growth picture looks good and the advice and expertise is out there to help you grow abroad or invest in the UK.
Kim Hayward is International Liaison Partner at BDO.