Nearly eight in ten (79 per cent) of UK businesses are concerned about tariffs and global trade uncertainty, prompting many to take pre-emptive measures, according to new research by Barclays.
UK businesses remain confident about their own prosperity (86 per cent over the next three to five years). This uncertainty has resulted in UK firms taking proactive steps to diversify international trade and build resilient supply chains, whilst looking to benefit from potential upsides to tariffs.
Nearly half (48 per cent) are already adjusting their US operations or supply chains, with 14 per cent scaling down and 15 per cent pausing or reducing investment in the market.
Additionally, 59 per cent of businesses that increased trade didn’t wait for tariffs to come into effect and reported doing so with Europe and Central Asia in the last 12 months – far outpacing growth in North America (18 per cent) and Asia-Pacific (10 per cent). Almost half of businesses (44 per cent) increased international trade over the past 12 months.
However, despite the concerns, many businesses expect the potential upsides from US tariffs to outweigh the negatives on profit margins (36 per cent), customer demand (37 per cent), export volumes (34 per cent) and supply chain stability (34 per cent). Yet in general, the majority of UK businesses (37 per cent) still expect a negative impact from the US tariffs on their overall prospects.
Matt Hammerstein, Chief Executive of Barclays UK Corporate Banking, said “Given the widespread uncertainty in the international trade environment, it’s unsurprising that businesses are taking proactive steps to adapt to these global pressures. A strong international trade strategy, and revised supply chain considerations, can turn geopolitical uncertainty into a competitive advantage and many larger firms are already adapting to build diverse global trade to develop resilience.”
The current economic climate is also driving action on productivity, with 46 per cent of UK businesses claiming improving productivity is more important now than a year ago. This comes amid a backdrop of 72 per cent of businesses finding difficulties in hiring skilled labour, which they attribute to holding back growth.
The majority (89 per cent) of businesses are planning to take steps to improve the productivity of their workforce, prioritising investing in upskilling employees through training (34 per cent) and streamlining processes and improving efficiency (32 per cent).
Investment plans reflect the ongoing focus on boosting productivity, with nearly half of businesses (46 per cent) intending to invest in staff training and development. Meanwhile, 39 per cent will prioritise innovation and new product development and 35 per cent plan to invest in digital transformation.
Business investment in physical assets also remains strong, with 35 per cent of firms aiming to purchase new or upgraded equipment, machinery, or vehicles, and 33 per cent planning new or expanded facilities.
Global uncertainty is impacting business uptake of debt finance for investment, with close to four in five (79 per cent) not borrowing to invest over the last 12 months. Of those who considered borrowing to invest but did not go ahead, 48 per cent cited economic uncertainty or awaiting a better environment for choosing not to. Over a third (34 per cent) cited high interest rates as the main barrier to borrowing.
However, fewer than one in ten (9 per cent) expect to hold back on investment altogether in the coming year, suggesting an intent to invest remains.
Hannah Bernard, Head of Barclays Business Banking, said “Productivity gains are seen as vital to help offset the increasing cost pressures on businesses. The focus on upskilling staff through training and development is a positive way for firms to combat skilled labour challenges, alongside efficiencies from digital transformation through emerging technologies such as AI.”
“Businesses are also identifying key areas for investment and with interest rates coming down coupled with this increasing proactivity in international trade, there are positive signs for reducing barriers to investment.”
Impact of tariffs on trade
| Business size | |||||
| All | Micro | Small | Mid-sized | Large | |
| Net negative impact on profit margins | 32% | 28% | 34% | 32% | 33% |
| Net positive impact on profit margins | 36% | 4% | 36% | 43% | 49% |
| Net negative impact on export volumes | 26% | 12% | 31% | 28% | 30% |
| Net positive impact on export volumes | 34% | 2% | 30% | 43% | 49% |
| Net negative impact on overall business prospects | 37% | 26% | 38% | 42% | 39% |
| Net positive impact on overall business prospects | 28% | 5% | 27% | 32% | 40% |
| Net negative impact on customer demand | 27% | 26% | 28% | 23% | 28% |
| Net positive impact on customer demand | 37% | 6% | 35% | 48% | 49% |
| Net negative on supply chain stability | 31% | 23% | 39% | 32% | 31% |
| Net positive on supply chain stability | 34% | 2% | 30% | 44% | 49% |
