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A new report finds that British SMEs are struggling to recover from a decline in exports beyond Europe in the second half of 2013, but GTR has learnt that for some SMEs the outlook for exports is more positive.

Despite growing confidence in the health of the domestic economy and an improved trade balance with Europe, Western Union Business Solutions International Trade Monitor’s (ITM) latest survey indicates that British SME exports to some of the world’s largest markets have failed to regain the momentum lost last year. Concerns surrounding the health of the global economy, the eurozone crisis and currency fluctuation still plague British SMEs.

The quarterly economic confidence survey of over 650 trade-related SMEs in the UK, reveals that 9% have customers in China compared to 15% a year ago, while 6% sell to India compared to 14% a year ago.

17% of British SMEs sell to other Asian markets: a fall of 10% since Q1 2013, while SME exports to North America fell 11% in the period to 22%.

11% of SMEs now have customers in Africa and 10% have customers in Australia, compared to 18% for both markets a year ago.

Just 3% of British SMEs export to Brazil and 5% to other South American markets, compared to 9% and 12% respectively a year ago.

UK managing director of Western Union Business Solutions Christina Hamilton believes the survey indicates that Britain’s plans for an export-driven recovery aren’t working. She says: “There is a danger that the economic recovery will remain unbalanced. The risk is that businesses will return to old habits and rely too much on local customers at the expense of exporting to high-growth markets.”

Some SMEs disagree, having seen their exports increase. Group financial director of Hughes Safety Showers Stephen Dootson, believes that to successfully export, SMEs must ensure their product is right for their targeted export market. “It’s no good having a scatter-gun approach, you’ve got to be certain that your product is right for the country you want to go into,” he tells GTR.

“For us to grow, exports are really the only opportunity. We have a niche product and our biggest opportunity is in North America but we intend to open an office in China. We are seeing exports growing all the time.”

The survey indicates that a sustained period of pound appreciation against other major currencies has negatively affected exports. “UK companies have been forced to adapt to a constantly changing economic landscape, with a strong pound fuelling pressure on exports,” says Hamilton.

“Not only does sterling strength hurt the international competitiveness of UK SMEs but continued pound appreciation also has the potential to derail hopes of a more export-led recovery.”

Dootson agrees that currency fluctuation may affect exports to an extent but that eurozone uncertainty worries British SMEs most. “There are ways of covering currency fluctuation but it only takes one small crisis in Europe for the whole thing to become dragged back into focus,” he says.

ITM’s latest survey highlights the cautiousness of British SMEs towards exports but Dootson believes the right initiatives are being taken to alleviate the cautiousness among SMEs that the survey highlights. “The government is committed to an export-driven economy, providing tax incentives to help exports at the last budget,” he says.

“I’m not sure the whole message got across that this was a budget for export, but the government is doing what it can. They know that Britain doesn’t want to be an economy that is just growing on a property bubble again.”