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British Businesses Are 'Shunning' Overseas Trade Despite Calls To Push Exports

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Only one in five UK firms are planning to trade overseas, far fewer than in France or Germany, a study has suggested, despite warnings that growth of the British economy will be dependent on "export success".

A survey of 12,000 companies, including 2,700 in this country, showed that almost twice as many in France as in the UK are prepared to do business deals in foreign markets.

Workplace services firm Regus said UK firms are "cold-shouldering" foreign expansion even though it could be good for their business, with exports playing an increasingly important role in the economy.

In the report, 'The Export Imperative', just over 20% of British businesses who are currently focused on domestic sales are planning to expand their overseas operation.

That compares to more than 25% in Germany and the Netherlands, just under 40% in France and more than 53% in China.

Off those British firms that generate most of their sales internationally around 75% say they want to expand overseas.

But compared to many other countries, including Brazil (over 95%), Mexico (92%), the USA (81%) and Australia (77%), that's still below average.

The report says that the most important perceived obstacles to setting up foreign operations are establishing offices overseas, and difficulties hiring local workers.

Around a third of UK firms require managers to be fluent in a local language, compared with 45% in France and 57% in Germany, said the report.

Three-quarters of British businesses say that it is "essential" to have local staff when setting up a local operation, the report said. Just under 60% said that they could only set up a foreign business if property commitments were "very short term".

Regus regional director Celia Donne said: "Internationally-trading firms are faring better in the economic downturn than those who have stayed within their home markets.

"This applies to companies both large and small, and should act as a wake-up call for those still solely focused on domestic markets to find cost-efficient ways of moving cross-border to enhance earnings and spread risk."

A recent report by the CBI business lobbying group said that greater exports could add £20bn to the UK economy by 2020.

John Cridland, CBI director-general, said at the time economic growth was largely dependent on "export success".

"The UK has a proud history as a great trading nation, but in recent years our performance has been lacklustre. Exports success will be one of the key drivers of growth, but for too long we have been over-dependent on advanced economies for our trade."

The Federation for Small Businesses (FSB) said that the eurozone crisis and "red tape" was still choking export growth for UK businesses.

A spokesperson for the FSB told the Huffington Post UK: 'The crisis in the eurozone might be putting smaller firms off trading within the EU. We know from our research that around a quarter of small firms that do export but many find fluctuating exchange rates and red tape a problem."

However some economists warned that the Regus report did not necessarily prove the UK was doing worse than other EU nations.

Professor Philip Booth, editorial director at the Institute of Economic Affairs, told the Huffington Post UK that "these sorts of figures tend to be fairly suspect".

"It's hard to draw comparisons when a lot comes down to the peculiarities of the data," he said.

"For example, this will reflect things like the historical relationships between adjacent countries such as a Germany and Austria and differences in the number of small businesses in a country."

UK Trade and Investment, the government department responsible for promoting foreign trade, said recently that increasing exports should be a top priority in 2012.

They point to statistics suggesting that firms who export receive a 34% increase in productivity and are 12% more likely to stay in business.

Trade and investment minister Lord Green also recently announced a competition to encourage more small businesses to export goods.

Announcing the initiative, Lord Green said: "Our future prosperity will not come from relying on domestic markets alone. Across the world there are markets that are showing strong, long-term growth. We want to make sure that UK firms are not just trading abroad but thriving there. UKTI has a crucial role to play and will seek to double its client base to around 50,000 over the next three years.”

Responding to the Regus report, Nick Baird, CEO of UK Trade and Investment, said:

"Internationally-trading firms are faring better in the economic downturn than those who have stayed within their home markets.

"This applies to companies both large and small, and should act as a wake-up call for those still solely focused on domestic markets to find cost-efficient ways of moving cross-border to enhance earnings and spread risk."