More firms looking to trade abroad as UK growth and tax worries grow

An escalating number of UK firms are looking to take their business abroad amid weakening economic growth at home and concerns about tax hikes, Santander has found.

Nearly half of businesses, or 47%, are considering international expansion, according to its latest trade barometer.

This is up from a third who said so earlier this year, and more than double the 21% that said so in autumn 2023.

The bank said a growing appetite to enter global markets was being driven by worries about stagnant growth in the UK and possible tax rises on the horizon.

UK economic growth slowed to 0.1% between July and September, after increasing by 0.3% between April and June, the latest official figures show.

Growth in the last quarter marked the weakest quarterly performance since the economy slipped into a mild recession at the end of 2023.

Chancellor Rachel Reeves had been hopeful that stronger economic growth can help increase tax revenues and support Government spending plans.

Speculation that Ms Reeves will be forced to raise taxes has deepened in the run-up to the autumn Budget on November 26, which surveys suggest is driving more uncertainty and affecting business and consumer spending.

It comes after many big businesses say higher national insurance contributions, which were announced in last year’s budget, have added millions of pounds to their cost base.

Jane Galvin, head of corporate clients at Santander UK, said UK businesses are “determined to grow” but “face a challenging mix of geopolitical instability and weak domestic growth”.

“Domestic growth concerns make international growth particularly attractive, and with strong government policies and support to grow overseas, these firms can thrive and promote economic growth,” she said.

Santander conducts a twice-yearly survey of about 1,000 businesses with at least £1 million annual turnover for its trade barometer.

Its poll also found that 54% of businesses surveyed have either already shifted their supply chains away from China, or are actively considering doing so.

Santander said firms were taking steps to mitigate trade-related risks and diversify their supply chains to reduce dependency on the nation.

China and the US have been locked in a trade dispute throughout the year, with the world’s two largest economies making a series of threats over tariff rates.

At the same time, the trade survey found that south-east Asian countries such as Vietnam, Thailand and Malaysia are becoming increasingly attractive for UK firms who are eyeing cheaper labour and manufacturing costs.