2020 has seen a marked decline in business optimism in the UK, with COVID-19 and Brexit creating concerns over international trade and supply chains, according to HSBC.

Research by the banking group, which surveyed more than 10,000 business across 39 markets with 1,000 of those in the UK, focussed on business attitudes towards international trade in relation to external concerns.

The report found that UK companies’ expectations of revenue growth in the next year are lower than in 2019, with trade optimism down 18 per cent from last year. This drop means that UK businesses saw the largest fall in revenue confidence in Europe, alongside firms in France.

Despite this, a total of 68 per cent of British businesses remain positive about international trade compared to 63 per cent in France and Germany.

Furthermore, more than half of UK businesses are learning to adapt to the uncertain environment – around a quarter (23 per cent) are surviving day-to-day, slightly more than businesses at a European or global level, the survey found.

More than half (51 per cent) of UK firms expect international trade to become more difficult in the next year while only 16 per cent believe it will be easier. This is mostly due to issues presented by the pandemic and the incoming end of the Brexit transition period

Despite this, more than three out of five (61 per cent) UK businesses say they have no plans to stop or reduce trading with existing trade partners in the next two years.

The research also identified that a large majority (90 per cent) of business leaders have concerns about their supply chains as they deal with the impact of COVID-19 and economic uncertainty.

These are particularly focused on increasing costs, stability and suppliers being far from either target customers or their own business.

To alleviate these concerns almost a third (31 per cent) of UK businesses are selecting suppliers based on how effectively the country in which they are based has managed COVID-19.

Meanwhile more than a quarter (28 per cent) have increased use of digital or technology (28 per cent) and the same number are selecting suppliers based on operational resilience and their ability to deliver quickly.

Ian Tandy, head of trade for HSBC UK, said: “Supply chains have been tested like never before and many business leaders are now understanding the importance of having transparency through each layer of their suppliers.

“As firms look to 2021, increased resilience and increased usage of technology within supply chains will be of the utmost importance.”

He added: “There is understandably concern for the months ahead as we continue to tackle the pandemic and, with just one month to go until the end of the transition period, we’d encourage businesses to take time to understand how their operations could be impacted in January and put contingency plans in place.

“I am confident the innovation and entrepreneurial spirit of our businesses will carry firms forward with momentum into the next year as they continue to search for growth in markets around the world.”

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