Director of Smart Currency Business, Carl Hasty, says: “Traditionally, Europe has been the UK’s most important trade partner and the first port of call for most UK firms looking to expand abroad. Increasingly, however, businesses are looking beyond the Eurozone to higher growth markets elsewhere in the world. So much so, the Eurozone is now the destination of less than half of all British exports.”
Recent reports have listed parts of Asia, the Middle East and Scandinavia as among the fastest growing regions for trade. The major emerging economies of Brazil, China, Russia and India lie at the heart of this, but smaller countries with solid growth rates, including Thailand, Norway and Australia, are also becoming increasingly attractive destinations for British businesses.
Explains Mr Hasty: “This reduced concentration of exports to the beleaguered Eurozone can only be a positive. As a ‘not-putting-all-your-eggs-in-one-basket’ strategy emerges to exporting, companies will be able to take advantage of stronger growth opportunities in growing markets, while also reducing their risk profile by diversifying their market exposure. Such changes will create more stable, sustainable operations longer term.”
Mr Hasty says the move away from the Eurozone is something Smart Currency has witnessed for several years now, as SMEs seek to reduce their exposure to a volatile Euro and tax-hungry indebted countries, and instead align themselves with more organic growth opportunities elsewhere.
“Long-established SME clients of ours are increasingly looking to trade in US dollars as they expand into both the United States as well as other emerging markets where US dollar-denominated trades take place, such as China.”
Yet while US dollars are the most sought-after currency by UK businesses in terms of the volume of trades, it is the currencies of countries even further afield for which demand is growing most rapidly.
“Many of our clients have successfully begun trading the Chinese renminbi or the Russian rouble since we began trading these currencies in late 2012, including London-based children’s charity ThePromise. We have also seen strong growth in demand for Australian and Canadian dollars, as exporters seek opportunities in developed countries less acutely affected by the economic downturn, while Hong Kong dollars are popular as a means of getting into the Asian market,” says Mr Hasty.
“This is a discernible shift away from the Eurozone, and one we believe will not simply snap back once Europe eventually finds its feet again. These are structural changes with a long-term focus.”