- HMRC’s newest UK Overseas Trade Statisticsfor June 2016 show £1bn increase in UK exports to EU countries
- However, new research also shows how SMEs overcharged hundreds of pounds in needless fees for each international transaction hampering abilities to expand
- Some SME exporters could be overpaying an average of £52,800 a year due to unnecessary fees for cross-border transactions
New trade figures from HM Revenue & Customs (HMRC) today reveals that the UK’s exports to EU countries increased by £1 billion during June, the month of the ‘Brexit’ referendum.
The latest statistics for UK overseas trade released today, regarding June’s figures shows:
- EU exports in June 2016 were £12.2 billion, an increase of 1.0 billion (8.7%) compared with May 2016’s statistics
- EU Imports for June 2016 were £20.5 billion, an increase of £1.9 billion (10%) compared with May
- Meanwhile, non-EU Exports for June 2016 were £12.7 billion, an increase of £0.7 billion (5.6%) in May
- While non-EU Imports for June 2016 were £19.7 billion, an increase of £2.2 billion (13%) compared with May
- Overall, the proportion of all UK exports to the EU was 49% for June, while exports to key European partners like Germany increased to £2.8 billion (a 12.4% rise on May)
“While it may have expected that exports in particular might slow significantly down to the EU due to a potential ‘Brexit’, this was not the case as exporters in the UK appeared to ‘Keep Calm & Carry On’ in the best British tradition. In fact, exports actually increased by over 8% compared to May. However, we’ve yet to see how Brexit has actually affected UK companies who export to the EU.”
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Before & After Brexit:
UK Firms Vastly Overpay On International Transactions Due To Banks’ Fees
While today’s statistics show how little the impending Brexit vote affected overseas trade, new research from Covercy, reveals the extent to which UK businesses have been and are paying well over the odds for international payments, hampering their abilities to expand in a post-Brexit world.
Overall, traditional banks have a stranglehold of 95% of the business payments market and SMEs:
- For each transaction of £1,000 overpay £55
- For each transaction of £10,000 pay over £106 in needless fees
- For each transaction of £30,000 pay more than £220 in unnecessary charges
- One company making 20 transactions of £30,000 could overpay an average of £4,400 monthly or £52,800 a year in completely unnecessary fees
- For a company making 20 transactions of £10,000 this equates to £2,120 a month or £25,440 a year
- Meanwhile for a firm conducting 20 transactions of £1,000 this will total £1,100 a month or £13,200 a year
Meanwhile, importers have also been hit with unprecedented slides in the value of sterling due to Brexit (16% YoY against the dollar – £1/$1.31 and 18% YoY against the euro – £1/€1.18), while also facing these needless cross-border fees.
However, companies like Covercy are seeking to change this unfair situation by saving UK SMEs up to 80% on international transfers. They do this by not charging intermediary charges, which can amount to £40 per transaction and also offering lower currency exchange rates (of 0.5% – 0.75% versus traditional banks’ rates of 3% – 6%). All transactions can be completed within 24 hours, much speedier than banks. Covercy’s quoted rates are guaranteed through its own, unique algorithm, (unlike personal online exchange and remittance providers), meaning businesses know exactly how much their overseas transactions cost before committing to use the service.
Doron Cohen continued: “With 96% of UK SMEs exporting to the EU, ‘Brexit’ has brought huge uncertainty. With the potential of being locked out of the single market, these exporters may face new taxes which make them less competitive than their EU counterparts. Meanwhile, SME importers have already suffered a 18% rise in their costs in less than a year due to the fluctuation in sterling’s value.”
“This means the UK’s SME exporters and importers have to look for savings wherever they can find them. Unfortunately for years, banks have held SMEs hostage with over-the-top and unnecessary transaction fees for cross-border transactions.”
“With ‘Brexit’ now a reality, this stranglehold, whereby 95% of the business payments market is controlled by bank needs to be broken. The current situation is stifling the growth of SMEs in Britain at a time, when they need to be able to expand to survive and thrive.”