Ebury examines the latest official UK data to explore the vital role SMEs play in the country’s export economy. They explore why managing currency risk is becoming increasingly important as more businesses trade across borders.
Small and medium-sized enterprises (SMEs) are the backbone of the UK economy. They account for 99.9% of all private sector organisations. SME’s employ around 16.9 million people, 60% of the private sector workforce, and generate more than half of private sector turnover. Yet despite their dominance, only around one in nine UK SMEs currently exports goods or services overseas.
The latest government figures highlight both the scale of the opportunity for UK SMEs and the financial challenges that come with international growth. While smaller firms make up the overwhelming majority of Britain’s exporters, they often operate with tighter margins and fewer resources than larger businesses. This makes effective foreign exchange (FX) risk management an increasingly important consideration.
SMEs dominate the UK’s exporter base
According to the Department for Business and Trade, there were around 314,000 exporting SMEs in the UK in 2023. This represents approximately 11.6% of all UK SMEs. In total, around 318,000 UK businesses exported goods and/or services during the year.
HMRC‘s latest UK Trade in Goods by Business Characteristics data shows that SMEs account for approximately 82% of all UK goods-exporting businesses. By contrast, large businesses represent just 3% of exporters by number, yet account for most export value.
This demonstrates that Britain’s export economy is powered by a broad base of smaller firms, even if the largest multinational companies generate most of the overall trade value.
International growth creates new financial challenges
For many SMEs, expanding into overseas markets offers significant opportunities to diversify revenue, reach new customers and build resilience. However, international trade also introduces exposure to currency movements.
Whether importing components priced in US dollars, purchasing goods from suppliers in Asia, or invoicing customers in euros, fluctuations in exchange rates can directly affect profit margins.
Unlike larger corporations, SMEs often have less capacity to absorb unexpected currency volatility. A movement of just a few percentage points in exchange rates can significantly alter the profitability of an international contract.
Currency risk is becoming a strategic issue for growing businesses
Currency risk is no longer a concern only for large multinational organisations. As more SMEs seek growth through international trade, foreign exchange management is becoming an increasingly important part of financial planning.
Businesses that regularly import or export may benefit from greater visibility over future currency costs through tools such as forward contracts, market monitoring and tailored risk management strategies. These can help provide greater certainty when pricing products, forecasting cash flow and protecting margins from exchange-rate volatility.
For smaller businesses competing internationally, safeguarding profitability can be just as important as securing new customers.
International ambition remains strong
Despite ongoing economic uncertainty, exporting remains an important route to growth for UK SMEs. Government figures show that hundreds of thousands of smaller businesses are already selling goods and services overseas. Many more have the potential to expand into international markets.
Phil Monkhouse, UK country manager at Ebury, said, “As SMEs continue to grow internationally, financial resilience will become an increasingly important competitive advantage. While exchange-rate movements cannot be controlled, businesses can take proactive steps to manage their exposure and reduce uncertainty.
“The latest data serves as a reminder that Britain’s small businesses are not only the backbone of the domestic economy. They are also playing a vital role in the country’s international trade. Ensuring they have the tools to manage foreign exchange risk will help them compete with greater confidence in global markets.”
