OCED and IMF predict the UK’s economic growth will remain below 1% into 2026. UK businesses looking for strategies to shield themselves from local market growth constraints and explore new opportunities for growth. M&A growth options come with unique risks and expansion in established low growth market has limited upside. Organic growth through international expansion presents a compelling option for companies aiming to outpace system growth in stagnant domestic growth. In this insight, we explore how and why global diversification can be a growth engine for businesses in a low-growth UK economy.
1. Diversifying Risk in a Sluggish Economy
Economic growth under 1% signals limited opportunities for revenue and profit expansion within the UK. Businesses that rely heavily on domestic markets may find themselves vulnerable to any economic downturns or localised market saturation. International expansion allows businesses to outpace UK growth and diversify their risk by tapping into new and faster-growing markets, thus spreading their operational and financial exposure across a broader economic base.
2. Accessing Faster-Growing Markets
Many regions worldwide are experiencing significantly higher growth rates compared to the UK. By expanding internationally, UK-based companies can position themselves in emerging markets that not only grow at a faster pace but also have burgeoning middle classes with increasing spending power. High growth markets do not have to be exotic foreign markets. Identifying criteria aligned to your strategic objectives and risk appetite can identify growth markets, with a UK system of law, English speaking and an understanding of British culture and quality standards. Australia, Canada and NZ provide confidence and ease in accessing new growth markets. Levering these markets then act as a regional hub for future expansions.
3. Leveraging Competitive Advantages
UK companies often possess competitive advantages such as technological innovation, quality manufacturing, and high service standards that are highly valued in international markets. Research by the former UK Trade and Investment trade agency found Made in the UK could generate a 20% pricing premium. By expanding overseas, businesses can capitalise on these strengths in markets that are less saturated and more receptive to new British products and services. This strategic move not only boosts revenues but also strengthens the company’s brand on a global scale.
4. Benefiting from Local Incentives
Many countries offer incentives to attract foreign investment, including tax breaks, grants, and reduced tariffs. These incentives can significantly lower the cost of setting up and operating businesses abroad, making international expansion economically attractive. EU nations like Hungary, Poland and Spain provide a mix of capital grants, tax reductions and training incentives. In the Southern Hemisphere, some states of Australia provide capital expenditure grants and R&D incentives for Intellectual Property development. By taking advantage of these incentives, UK businesses can enhance their profitability while gaining footholds in strategic international markets.
5. Building Resilience and Competitiveness through International Operations
Companies with a presence in multiple markets are better positioned to weather economic fluctuations. International operations can compensate for sluggish performance in one region with stronger performance in another. This geographical and economic diversification is key to building a resilient business that can sustain growth under various global economic conditions.
Competitiveness can be enhanced with operations in both the UK and alternative time zones. With two offices and two teams, client work can be executed by the teams in the offices to accelerate client delivery. For example, UK operations complemented with an Australia or NZ operations on a 9 – 13 hour time zone buffer enables a follow the sun delivery model, producing 10 business days in a working week. Speed of service that domestic competitors cannot match.
Why International Expansion Partners Are Your Ideal Guide
International Expansion Partners is uniquely equipped to guide UK businesses through the complexities of global expansion. Our expertise in international markets, coupled with a deep understanding of the challenges posed by the UK’s low growth environment, makes us an invaluable partner for companies looking to thrive globally. We provide tailored strategies that align with your business objectives, ensuring a seamless and successful entry into new markets.
As the UK grapples with subdued economic growth, looking beyond its borders can provide businesses with the growth impetus they need. International expansion is not just a means of survival; it’s a strategic move towards securing a prosperous future. With International Expansion Partners by your side, the path to becoming a successful global enterprise is clearer and more achievable than ever.
