THE BUSINESS OF INTERNATIONAL TRADE
On July 21 2021, BritishAmerican Business and Bain & Company launched the inaugural Transatlantic Confidence Index. The Index measures the confidence of US companies active in the UK, including their views on investing in UK operations over the next two to three years and in the overall health of the UK's relationship with both the US and the EU.
BritishAmerican Business and Bain & Company surveyed 68 large cap American companies representing a combined 3,500 years of business experience and employing more than 275,000 individuals across every region of the UK.
US companies expressed very high confidence in the UK as a destination for business, with a positive outlook for future investments despite the challenges of the Covid-19 pandemic and the uncertainty surrounding the country's exit from the EU. However, the survey results also reveal that many executives are concerned about the current state of UK-EU relations. They worry political tensions and practical matters such as supply chain problems and the ability to access talent from the EU could overshadow the outlook for the future.
Among the key findings of the survey:
Respondents rated overall confidence in the UK a 7.8 on a 10-point scale and identified the country's most important assets such as the UK's stable and predictable regulatory environment, its openness when attracting talent from abroad, and its strong academic and R&D records. Despite difficulties around the UK-EU relationship, which are impacting supply chain logistics and access to talent, about 60% of respondents said they planned to increase investments in the UK over the next two to three years.
Asked what they would recommend for the UK to maintain its top ranking as a destination for US business, companies highlighted improving the political and economic relationship with the EU. The second most important priority was finalising negotiations for the US-UK Free Trade Agreement, which have currently been put on hold. Other top recommendations for the UK Government included providing greater clarity around its industrial strategy and maintaining a business-friendly corporate tax environment.
"The UK is very well-positioned to continue to attract companies from the US and from around the globe" says Duncan Edwards, Chief Executive of BritishAmerican Business. "But this positive outlook will be enhanced by a comprehensive trade deal with the US, a more positive political and trading relationship with the EU, and more business-friendly domestic policies."
Respondents viewed the health of the US-UK trade and investment corridor favourably, rating it on average a 7 out of 10, which should improve in the event of a trade agreement. However, that confidence level drops to 5 when discussing the UK-EU relationship.
Respondents assessed the largest impact of the UK's exit from the EU to be on supply chains because of 'red tape' issues, followed closely by the ability to recruit and move talent between the UK and the EU. Regulatory barriers, loss of ability to perform certain services in the EU, and tariffs rounded out the list of impacts.
"It is encouraging to see that US businesses still value the UK as hub for innovation," says Jonathan Frick, a partner at Bain & Company based in London. "Overall, US investors have maintained the majority of their workforces since the country's exit from the EU and in particular, financial services firms believe the City will remain a hub for the business community with a broad and diverse talent pool."
To read the full pdf report, click here.
© The Exporter 2019-2021