British exporters are turning their gaze to the Middle East and Asia as they look to avoid economic uncertainty and the uncertain trading relationship with Europe, a new survey says.
The Asia-Pacific region in particular is set to be targeted, with an 18 per cent balance of UK businesses expecting exports to increase over the coming year, according to the twice-yearly report from Lloyds Banking Group.
Expectations of more exports to the Middle East also rose, with the balance of London’s exporters predicting an increase rising by five percentage points – although the capital’s businesses see North America and the Asia-Pacific regions as the most promising growth areas.
The report shows that business confidence in London has recovered since September but the capital remains among the least confident regions in the country. Confidence countrywide remains below long-term averages.
More than a fifth of London businesses see economic uncertainty as the main threat over the next six months, while 16 per cent expect weaker domestic demand.
London businesses expect to lower staffing levels over the next six months, as the UK begins the process of leaving the EU.
Prime Minister Theresa May is set to trigger Article 50 – the EU treaty clause on leaving – by the end of March this year. Negotiations with the various EU institutions and leaders will then begin.
Inflation is set to rise over the year as the sharp devaluation in the pound feeds through to consumer prices and the Office for Budget Responsibility expects UK economic growth of 1.4 per cent. However, business confidence has recovered relatively well after a post-Brexit-vote dip.
Paul Evans, regional director of SME banking for Lloyds said: “Despite a slow down on new hiring, businesses are planning to export to new territories and overall confidence is improving.”