Figures from World First show that more than £198 million was transacted into euros during the month of October, up 59 per cent from September.
The importance of Europe as a trading partner is further highlighted by the fact that this figure is more than 22 times the value of GBP that was sold into CNH (yuan) which stands at £7.25 million.
Both China and Europe have experienced an upsurge in trade with UK based SMEs over the last 12 months. Trade between the UK and China has grown rapidly with a year-on-year increase of 238 per cent in SMEs selling sterling for Chinese yuan compared with a 107 per cent increase in the EUR bought from GBP over the same period.
Taken together, this data suggests that while China remains an important growth market, the economic bloc of the European Union is the cornerstone of UK SME trade.
Jeremy Cook, chief economist at World First says that the latest trade numbers show that while China is increasingly becoming a trade destination for UK SMEs, Europe is still the preferred destination for business.
‘Clients of World First sent 22 times as much money to Europe in October as they did to China with 1/3rd of our transactions this year being clients selling sterling to purchase the European single currency,’ Cook says.
‘It’s clear that any decision to reevaluate Britain’s relationship with the EU needs to be carefully considered given the volume of trade being conducted and perhaps more crucially, the continued growth trajectory of this.’
Cook says that China is and will continue to be a rising dawn in the East but these figures suggest that the sun isn’t close to setting on the UK’s trade relationship with Europe.
‘What is clear however, is that with volatility present in both markets, UK SMEs must be aware of their FX exposure and manage this effectively in order to prevent currency fluctuations impacting the bottom line.’