British Firms Increasingly Seek Overseas Expansion Amid Brexit Uncertainty

Nearly half of British companies are now planning to expand outside the UK, according to a new Santander survey. That's a massive jump from 21% in fall 2023 to 47% today. The reason? Britain's economic growth has stalled, and businesses are worried about tax hikes coming down the pipeline.

The numbers tell a stark story. Britain's economic growth dropped to just 0.1% in the third quarter of 2024, down from 0.3% in the previous quarter. This marks the weakest quarterly performance since the economy slipped into recession at the end of 2023.

Companies are getting nervous about what's ahead. Chancellor Rachel Reeves is set to unveil the autumn budget on November 26, and speculation is mounting that she'll raise taxes to fund government spending plans. Reeves had hoped stronger economic growth would boost tax revenues naturally, but those hopes are fading fast.

The uncertainty is already hitting business costs. Many large companies say the higher social insurance contributions announced in last year's budget have added millions of pounds to their expenses. Now they're bracing for more.

"British companies are determined to grow, but they're facing a tough mix of geopolitical instability and weak domestic growth," said Jane Galvin, head of corporate clients at Santander UK. She notes that weak home market conditions are making overseas expansion particularly attractive.

For investors and markets, this trend signals a potential drain of business activity and investment from the UK economy. When companies expand abroad instead of at home, it can mean fewer jobs, less tax revenue, and reduced economic multiplier effects domestically.

The Santander survey, which polls around 1,000 companies with annual sales of at least £1 million, reveals another shift in business strategy. About 54% of companies have either already moved their supply chains away from China or are seriously considering it. This reflects broader efforts to reduce dependence on Chinese suppliers and diversify supply chains to manage trade risks.

The combination of domestic economic weakness and global supply chain restructuring suggests British businesses are fundamentally rethinking their operational strategies. Rather than waiting for conditions at home to improve, they're looking elsewhere for growth opportunities.