Press release

28 Jun 2021 London, GB

UK companies say trade strategy is more important than ever before, finds EY research

UK companies say trade strategy is more important than ever before, finds EY research

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Nick Cosgrove

Senior Manager, Media Relations, Ernst & Young LLP

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  • UK companies more likely than European counterparts to say trade strategy is more important than ever before
  • Two-thirds of UK companies are concerned about the impact on their business of rising protectionism and new trade barriers
  • And finding people with relevant skills and experience is a real challenge for companies, with 59% finding it difficult or very difficult to find the right staff
  • 42% of UK businesses say trade strategy is driven by a need to increase their global reach, while just 29% of non-UK businesses say the same

London, Monday 28 June 2021 – UK corporate leadership teams are much more likely than their European counterparts to view their company’s international trade strategy as a higher priority than ever before, according to new research from EY.

EY’s survey of trade specialists at 400 companies worldwide found that 68% of UK respondents felt that their C-Suite saw their international trade strategy as more of a priority than in previous years, while 58% of European respondents said the same. Eighty-eight per cent of all respondents said their company had a trade strategy function – although only 59% had a dedicated trade team.

Despite the increasing importance attached to trade strategy, the research reveals some corporate uncertainty when it comes to preparedness for trade risk and disruption: one-in-five respondents said they did not have a strong level of confidence in their company’s ability to respond quickly to changing trade policy circumstances.

This uncertainty extends to finding staff with the right trade experience, with over half (59%) saying this is expected to would be ‘difficult’ or ‘very difficult’, whereas only one-in-ten (9%) believe it would be ‘easy’. This adds an extra barrier for businesses when developing their trade capabilities.

Sally Jones, EY UK Trade Strategy & Brexit Leader, says: “Trade has never been higher on boards’ agendas. It’s encouraging to see the vast majority of companies have some of the basics in place to manage trade strategy challenges, and it’s clear that not engaging with trade strategy means companies could be left behind by their competitors.

“However, the research also identifies some glaring gaps when you scratch beneath the surface. There’s often a fragmentation of responsibility, with business functions as varied as management, tax, finance and legal having some involvement in corporate trade decision-making.

“We can also see there is a focus on the operational aspects of trade over the big picture strategy questions and tackling newer types of trade barriers. This is mirrored by skills gaps when it comes to trade risk and threat identification – only 51% of UK respondents said they had the ability to do this, for example. This might explain some of the uncertainty companies feel about their ability to respond quickly to changing circumstances.

“Addressing the fragmentation of responsibility should be a top priority as companies can’t take a holistic view of trade issues and opportunities while trade is managed in silos.”

Rising Protectionism and trade barriers are companies’ key trade concerns

EY’s research also found that 69% of UK companies identified rising protectionism as an international trade and business concern, followed by 65% saying the same about sustainability and climate change, and 58% who said the same about technological disruption.

While UK companies’ leading concerns matched those of non-UK companies, the survey found that UK respondents were much more concerned than their overseas counterparts by the trade implications of immigration barriers and accessing talent (49% concerned in the UK; 33% for non-UK respondents), and labour concerns in the supply chain (40% in the UK; 33% for non-UK respondents).

Immigration and access to talent concerns were most acute in the health and wellness sectors (66% of all respondents in this sector identified this area as a concern), and infrastructure (63%). Manufacturing and mobility businesses (46%) were comparatively more worried about labour concerns in the supply chain.

Sally Jones adds: “Widespread concerns about rising protectionism and climate change are understandable, but it’s notable that UK companies have particular worries about immigration and talent. As a result of the pandemic’s effects on travel, the impact on Brexit on the movement of people and skills has been hidden, and this is an area with the potential to have significant consequences for UK businesses when ‘business as usual’ resumes. With businesses gearing up for recovery, talent shortages could be a key pinch point.”

Global Britain: UK businesses expand their horizons

While both UK and non-UK businesses were most likely to say that the priority driver for their trade strategy was improving the cost effectiveness of insourcing products and services (UK 64%; non-UK 61%), UK businesses were much more likely than overseas businesses to say their trade strategy was driven by a need to increase their global reach (UK 42%; non-UK 29%) and a need to capitalise on demand for their products and services (UK 61%; non-UK 47%).

Conversely, 55% of UK businesses were concerned about their ability to access new markets, slightly higher than the 51% of non-UK businesses in the same position.

Positively, 70% of all respondents – and 73% of UK businesses – said that they are confident about making use of Free Trade Agreements.

Sally Jones says: “UK businesses do seem more likely to be looking to expand their profile overseas; losing access to the EU’s Single Market could be an important driver here.

“UK companies have a fairly high degree of confidence when it comes to managing some of the operational aspects of trade, especially when compared to non-UK companies, but they are behind in some areas such as risk assessment or new market identification and assessment. Our research also found that the use of some common trade KPIs is lower in the UK than it is elsewhere. If UK companies are to achieve their international trade ambitions, a focus on the ‘strategy’ part of ‘trade strategy’ will be needed.”