Well, it’s pretty difficult to deny the impact the pandemic has had on the British economy. In 2020, we got hit hard, and it left both the government and most businesses scrambling for ways to protect the financial status of the country. Interestingly, the saving grace is set to be the SMEs trade, which could provide up to £290bn each year for the economy. Considering that the economy took a 9.9% dive in 2020, the highest on record, it’s clear that the injection of cash is badly needed.
Something worth noting is that despite this, the exports market for the UK did see a £0.7bn growth. Now, that’s not a big figure by any means, but it does show that there’s potential even in the midst of difficulty. A new study conducted by Sage and Capital Economics suggests that the small and medium-sized enterprise sector could be a key player in the redefinition of the economy in a post COVID world.
The Diamond in the Rough
The study conducted by Sage indicates that there are roughly 375,000 SMEs which have exportable assets in the UK, but they do not utilise these assets. In the event that these assets are properly utilised, this would generate an extra £290bn in assets for the economy. This amount is nearly half of what the trade agreement between the UK and EU is worth, so it is important to explore it properly, especially if we intend to survive the fallout from the pandemic.
SMEs are already starting to recognise the potential their trade has, with up to 67% of them beginning to increase revenue streams through exports. There is a gradual inclination towards international trade, and this is supported via wave of digitalisation, which has been greatly accelerated during the pandemic.
It is also worth noting that the SME diversification could also address unemployment issues. The UK is facing a critical issue with unemployment, and even 10% of SME exports could add £29bn to revenues, which would support 215,000 new jobs in the industry, and create a further 50,000 in related sectors.
To try and create a proper level of support, Sage is petitioning the government to implement what it calls a “SME Trader Support Service”. Ultimately, this would help to support the SME trade industry by building confidence in businesses to get involved with the exports. Other suggestions include the government providing financial incentives, expanding digitalisation, and helping to build an unstable economy back up.
The research also points to the conclusion that stimulating investment into technological resources would help the SME industry to get involved with international markets. The rise of the internet and the resources it can generate means that businesses can explore the export market with even greater ease. To list a prominent example, e-commerce platforms would allow the SME’s to get access to a broader customer base, and accounting tools would reduce the issues of dealing in more than one currency.