Closer ties with US and India could provide small firms with millions of new customers
This week, Prime Minister Boris Johnson had his first face-to-face meeting with US President Joe Biden. The two leaders discussed a number of topics from climate change and COP26 to the Irish border, alongside this, one of the Prime Minister’s priorities has been a potential UK-US free trade deal. While this looks some way away, there is hope that the UK could soon join the North American free trade pact, which could provide good news for the 13% of Brits that plan to start a business in 2021.
A deal with North America and a proposed deal with India – one of the world’s fastest growing economies – is set to increase the number of potential customers for businesses in the UK by over a billion. Already, around 160,000 VAT registered businesses in the UK export their goods and services around the world to a value of £366.5 billion. The UK government will hope that with more straightforward regulations and fewer tariffs this figure could increase significantly in the coming years.
With over 6 million SMEs in the UK, making up 99.9% of private sector businesses, thousands of firms could benefit from an increased potential customer base. It is estimated that around 9% of SMEs export some goods already, so with 800,000 new businesses started in 2020 and many more to come in 2021, could the UK be in line for an exporting boom?
The world is becoming ever more connected and interlinked, especially in the world of business and in much the same way that SMEs are becoming more trusted in the UK so will they become a big part of the global economy. Trade deals, and making it easier to export, provide a boost to firms whose addressable market has just substantially increased.
This desire to startup and go it alone looks set to continue in 2021 and beyond as the desire to support small firms grows from the point of view of both consumers and investors, as our research shows. This is also true of what we have seen at IW Capital, investing in a number of innovative growing businesses throughout the pandemic with the support of our investor base.
From what we have seen, SMEs are set to become even more important to the UK economy, both domestically and internationally. There is a huge amount of talent and ambition in Britain’s entrepreneurial ecosystem and helping them go global should be high on the government’s agenda.
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