Nearly half of all UK businesses are now actively considering expanding their operations overseas, according to startling new research from Santander, as concerns over Britain's stagnant economy and potential tax hikes intensify.
Domestic Stagnation Fuels International Ambition
The bank's latest trade barometer reveals that 47% of British firms are contemplating international expansion, marking a dramatic increase from just a third earlier this year and more than double the 21% recorded in autumn 2023.
This significant shift in business strategy comes against a backdrop of worrying economic data. Official figures show UK economic growth slowed to just 0.1% between July and September, following 0.3% growth between April and June. This represents the weakest quarterly performance since the economy entered a mild recession at the end of 2023.
Jane Galvin, head of corporate clients at Santander UK, commented: "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."
Tax Concerns and Supply Chain Shifts
Speculation surrounding Chancellor Rachel Reeves's autumn Budget on November 26 has deepened business anxiety, with many fearing tax increases could further strain operations. This follows last year's budget, which saw many large businesses facing millions of pounds in additional costs from higher national insurance contributions.
Santander's survey of approximately 1,000 businesses with at least £1 million annual turnover also uncovered significant supply chain restructuring. 54% of businesses have either already shifted their supply chains away from China or are actively considering doing so.
Firms are taking proactive steps to mitigate trade-related risks and reduce dependency on the nation, particularly as China and the US remain locked in an ongoing trade dispute throughout the year.
New Opportunities in Southeast Asia
As businesses look beyond traditional markets and supply chains, southeast Asian nations are emerging as increasingly attractive alternatives. Countries including Vietnam, Thailand, and Malaysia are drawing British firms seeking cheaper labour and manufacturing costs.
Galvin emphasised the potential benefits: "With strong government policies and support to grow overseas, these firms can thrive and promote economic growth."
The research underscores a fundamental shift in British business strategy as companies navigate domestic challenges while seeking growth opportunities in international markets and diversified supply chains.
