American Express International Trade Condifence

INTERNATIONAL TRADE: 74% GOVERNMENT CONFIDENCE, CONCERNS AND RISKS FOR UK SMES 73% EXPORT-LED RECOVERY = Study reveals that overseas trading is seen as a key element of the UK's economic recovery. However, confidence in international trading has decreased, with millions of small businesses believing there is not enough advice, support and information available for British businesses. Currency fluctuations are amongst the biggest concerns when it comes to trading internationally, yet UK businesses are in danger of losing billions of pounds by not managing their currency risk. The International Trade Tracker from American Express FX International Payments questioned 1,500 SME business leaders in the UK, Australia and the USA. « KNOWLEDGE GAP 82% Q: Do you feel there is enough help and information? Q: Do you manage financial risk when trading internationally? Q: If currency fluctuations are a concern, which currency in particular worries you? the US Dollar is the top currency of concern for the US and Australia. NO: NO: 26% 46% 47% NO: NO: NO: 55% NO: However this is only the second most concerning for UK SMES, with the Euro topping the bill for 56% of UK SME business leaders. 54% 61% 2.2 million UK SMES CURRENCY A FEAR FACTOR think there is not enough advice, info and support available for international trading Q: Has your confidence in trading internationally decreased? IMPACT UPON CONFIDENCE €! $! TO TRADE « INTERNATIONALLY Decrease In the past 12 months US Dollar Australian Dollar Japanese Yen 36% of UK SMES say their confidence in international trade has decreased, Sterling Euro Canadian Dollar 81% of which cite that this decrease Swiss Franc occurred in the last 12 months. MACRO EFFECT = TOP CONCERNS WHEN TRADING £20.4bn at Risk - 55% of UK SMES do not manage INTERNATIONALLY » currency risk, putting the 55% average UK SME at risk to lose £19,745 a year, bringing a national bill of £20.4 billion Currency fluctuations Pricing Currency fluctuations are the top concern for Red tape and legislation Intemational trade 49% of UK SMES paperwork Payment problems ie, cash flow CONCLUSIONS: It is not surprising that currency fluctuations are the number one concern for SMES trading internationally. For example, since the beginning of 2011, the US dollar has weakened by over seven percent against Sterling. Despite the currency concerns, over half (55%) of UK SMES do not protect themselves from risk. The lack of protection is largely due to a knowledge gap, as 21% of UK SMES say they are unaware of the benefits and an additional 28% citing they have never considered it before. AMERICAN EXPRESS 40% 37% 31% | %3% 47% %6 %9 31% %T8 %4% %99 62% %0%