Bouncing back from the pandemic

The Autumn 2021 edition of the Santander Trade Barometer shows a surge in confidence among UK businesses, thanks to the reopening of the British economy after the lockdown in early 2021 and the apparent success of the coronavirus vaccine roll-out.

Confidence at record levels

Almost three-quarters of businesses (73%) now say they are confident of growth over the coming three years – a sharp rise on the 65% in the last edition of the Trade Barometer published in April, and the highest proportion on record in 12 iterations of the research.

Notably, businesses that already trade on the international stage are more likely to be confident of future growth than their domestic-focused counterparts: 79% of international businesses are confident compared with 62% of UK-only businesses.

Confidence has increased most markedly since the start of the year among those companies most impacted by the government’s lockdown policies in 2020 and the first half of 2021. For example, 81% of businesses in travel, tourism and leisure are now confident of growth in the next three years, up from 60% in the spring.

In the wholesale & retail sector, 79% of businesses are now confident compared with 66% in the spring; and among manufacturers, confidence has risen from 66% to 80% as domestic and global demand has recovered.

Influencing future growth

COVID-19 is still expected to have a significant role to play with regards to growth in the months and years ahead: 60% of businesses say the pandemic and its impact on demand will influence expansion over the next three years, but this is down from 70% in the spring. But businesses expect factors such as the ability to attract skilled staff (67%) and the performance of the UK economy (62%) to be more influential.

Businesses in travel, tourism and leisure (76%) and wholesale & retail (70%) are more likely to be concerned about the impact of COVID-19 on demand and their ability to operate – reflecting the consequences businesses in these sectors have already suffered from lockdowns and other restrictions over the past 18 months.

Overcoming negative impacts

Looking at how businesses have performed over the past year, there has been a substantial improvement in the Autumn 2021 edition of the Trade Barometer. Some 43% of businesses report their performance over the past 12 months has improved, up from just 30% in the spring. Only a quarter of businesses (24%) say performance has worsened (39% in the spring).

In this edition of the research, fewer businesses report that they have been forced to delay or cancel expansion plans as a result of the pandemic: for example, 26% say they have postponed hiring plans compared with 37% in the spring.

Indeed, 35% of businesses say one of the main negative effects of the pandemic has been on their ability to hire staff and 29% say they have faced difficulties in retaining workers.

However, there are now signs that investment levels could soon start to recover, and skills are again seen as a crucial issue. Almost half of businesses (48%) plan to invest in recruitment over the coming 12 months, up from 36% in the spring. Almost a quarter (23%) of businesses intend to invest in making a long-term switch to remote or hybrid working practices, while 26% plan to spend money on overhauling their current business model.

Post-pandemic challenges and opportunities

The biggest COVID-related challenge businesses expect to face over the coming 12 months is supply-chain disruption: 35% of businesses think this will be a major issue, followed by staffing problems (32%). More than a quarter (26%) are concerned that ongoing COVID-19 restrictions will mean they are unable to attend trade events around the world – something that many businesses see as a crucial step on their road to success in international markets.

The flip side is that the pandemic has also opened businesses’ eyes to new opportunities. For example, 30% of businesses are focused on digital transformation, up from 27% in the spring. The switch to new online sales channels was a key feature of the early stage of the pandemic, and the growth of ecommerce looks set to endure.

Almost a quarter of businesses (24%) are looking to improve performance by rethinking their supply chains – for example to increase diversity among suppliers and reduce concentration risk.

Opportunities on the international stage will be significant for a large number of businesses. Over a third (35%) of businesses say that growth in the UK market will be a main driver of recovery from COVID-19, but international markets have a crucial role to play as well: 26% of businesses believe that growth in existing international markets will help them bounce back from the pandemic, while 18% expect to recover by moving into new territories around the world.

Meanwhile, a fifth (21%) of businesses say international markets have become more important as a result of COVID-19, providing them with an excellent opportunity to seek growth from a broader range of customers. Only 5% say international trade has become less important.

How we can help

Santander has a team of sector experts, who work with businesses to provide both financial and non-financial solutions tailored to businesses in their respective sectors. The team understand the different challenges that businesses in their sectors are facing and work with their own ecosystem of solution providers to support businesses in overcoming these challenges. The team also work closely with our international specialists to enable us to help businesses with both their domestic and international growth. Through our global networks of solution providers, we can help businesses save time and money when accessing the support they need to grow internationally, whether that is helping a business to find new connections, providing regulatory support and training, or guidance with shipping and logistics. 

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If you need any help, please contact us on: international@santander.co.uk

For more information, please read the full Trade Barometer report