Santander’s latest Trade Barometer reveals that 52% of UK businesses now view overseas trade as more important due to current domestic economic challenges – more than double the figure of 26% recorded in Spring 2020. This comes as domestic growth remains stagnant, with confidence in UK growth dipping to 70%, down from 74% in Autumn 2024. As a result, companies are increasingly targeting high-potential markets outside the EU such as China, the US and Australia, while Ireland and Italy have fallen out of the top ten export destinations for the first time since 2022.
International horizons and trade concerns
China has re-entered the top 10 current export destinations for the first time since Autumn 2022 at number eight, while Ireland and Italy have declined significantly in popularity. For future trade, Ireland dropped to 7%, down from 13% in Autumn 2023, while Italy fell to 8% this wave, from 13% over the same period. These figures underscore a gradual but steady shift away from the EU bloc toward more globally distributed trade relationships – though UK businesses will be paying close attention to a potential new UK-EU trade deal, which could reframe trading conditions within the bloc.
Despite geopolitical tensions and trade disruptions, particularly those influenced by US policy shifts, the United States remains amongst the top export markets (54%, up from 52% in Autumn 2024), falling just behind Germany (55%, down from 59% in Autumn 2024) and ahead of France (52%), as the UK and US announce a new trade pact.
However, this pivot also brings new challenges: concerns about rising global protectionism are mounting, with 63% of UK businesses warning that the risk of new tariffs threatens their growth. Larger firms (£100m+ turnover) are particularly exposed, with 72% highlighting tariff risk even before the Trump administration’s April 2 announcement of new US tariff proposals.
India is also back in focus following the signing of a new UK-India trade agreement, although 79% of UK firms currently trading with the market still face barriers such as bureaucracy, inconsistency in policy, tax regime and industry regulations (34%) and difficulties finding trusted partners (32%).
Call for support
International trade is becoming more challenging, with only 34% of businesses finding it easier to trade internationally now than five years ago. Although energy cost pressures have fallen since the high of Spring 2023, businesses continue to face significant headwinds, with labour costs remaining stubbornly high for 55% of firms in Spring 2025. Domestic and aspiring UK businesses identify key barriers to internationalisation as difficulties in navigating economic and political turbulence (44%), excessive transportation costs (46%) and lack of managerial time (45%).
As such, demand for government and third-party support has steadily risen across the last three waves of the Barometer, with 33% of businesses calling for tax breaks and 32% seeking support reducing regulatory requirements and bureaucracy overseas. Meanwhile, a further 29% seek more support identifying the best markets for overseas growth, up from 22% in Autumn 2024.
Jane Galvin, head of corporate clients at Santander UK, said: “As the UK faces ongoing domestic challenges, businesses are looking beyond our borders for growth opportunities. There is a real urgency for companies to tap into international markets, despite the more difficult and often unpredictable global landscape.
“While Germany and France are still high on the list of markets UK firms do business with, there is a clear downward trend in UK-EU trading activity. As these companies plan their future growth, they are looking towards the likes of China, the US, Canada and Australia – and they need support finding the right partners, as well as guidance on new markets.
“We welcome the announcement of a UK-US trade deal, and hope to see more trade agreements follow. We encourage any efforts made by the Government to make the UK more competitive internationally and support the growth of our country’s businesses overseas.
“With the right tools to thrive in a more hostile economic environment, UK businesses are ready to tackle the challenges of international expansion beyond EU borders.”
