Hurray! The recovery is gathering pace – but where does that leave the North East?
I am sure you have heard the news but just in case you have missed it, the UK economy is now growing again – up by 0.7% in the quarter to June 2013. Indeed we are told the double dip recession never actually happened! On a national level that’s great news – but what does it mean for the North East, who have suffered and will continue to suffer, public and private sector job losses as a result of austerity measures?
To find an answer to the question it is worth exploring where regional success has come from during this tough economic climate. We can bring many success stories out of a difficult six years in which we lost our biggest corporate, Northern Rock plc. As a region we have excelled in automotive, global software solutions, petrochemicals and precision engineering to name but a few. These successes have a common thread – they have all capitalised on effective export strategies.
Through developments in communications and travel, no business can ignore global markets and must now play an international game if it wants to succeed. Internationalised business now affects everyone and may well prove to be the key to growth and success in our region. My clients are asking more than ever how they go about trading with the rest of the world. It may be a small business making their first sale abroad or an established business setting up a subsidiary in Asia. Either way, we need to increase our expertise in creating and delivering products and services which are attractive to the US (our biggest market in the North East), the EU and the rest of the world. This introduces, however, additional levels of business risk.
Businesses reaching out internationally must consider four main risk areas:
Liability Risk Ensuring adequate insurance cover is in place which extends to the international areas in which trade is carried out
Monetary Risk Trading with overseas customers will involve currency transactions which require managing effectively
Fiscal Risk Taxes, particularly VAT can become complicated both here and abroad as a result of exporting goods and services. It is essential that the correct professional advice is obtained. It is also a potential opportunity to reduce taxes if structured properly.
Commercial Risk Trading internationally can bring with it many cultural challenges so the exporter must go in with their eyes open.
Trading overseas or in the UK with overseas companies is very rewarding provided the risks are thought through and managed effectively. The best starting point is to ensure the right advice is taken from professionals who know what they are doing.