UK Firms Turn to Trade Finance as Global Tensions Rise

The UK business landscape is currently navigating a complex intersection of geopolitical instability and operational strain. According to the latest Barclays Business Prosperity research – which surveyed over 500 UK business leaders – the conflict in the Middle East is already exerting significant pressure on corporate margins.

The data shows that 66% of businesses are experiencing direct hits from fuel and energy prices, while 50% report moderate or significant supply chain disruptions. As these macroeconomic headwinds intensify, the role of fintech solutions and sophisticated banking tools has moved to the forefront of corporate strategy.

Mitigating operational impact

UK firms are not standing still. In a bid to offset rising costs, 37% of businesses have taken steps to reduce energy usage or improve efficiency, and 32% have already adjusted their pricing models.

The research highlights an increasing reliance on digital financial management. Currently, 29% of firms are cutting discretionary spending or wider operational costs, a figure expected to rise to 38% over the next six months. Furthermore, a third of businesses plan to pass rising costs on to consumers as a defensive measure.

This shift is already visible in consumer data. Barclays Consumer Spend figures indicate that fuel spending rose by 10.9% year-on-year at the start of the conflict, while discretionary spending on holidays and travel fell by 7.9% in mid-March.

The centrality of trade finance

Access to flexible finance is proving to be a critical pillar of resilience as firms adapt to the change.. The demand for fintech-driven solutions is clear: support with managing cash flow (41%) and access to working capital or short-term credit (39 %) are becoming increasingly vital for survival and growth.

The vast majority of leaders (83%) view existing cash savings as essential to navigate the current disruption. However, external financial architecture is equally important, with working capital support (78%), international trade finance (68%) and cross border payments solutions (67 %) identified as key enablers.

Abdul Qureshi, Head of Business Banking at Barclays, notes: “UK businesses are facing a convergence of pressures, with multiple challenges hitting at once. The impact is being felt most acutely by firms exposed to high energy costs, disrupted supply chains and international trade, and is compounded by a prolonged period of uncertainty ahead.

“For SMEs, this means dependable cash flow and access to working capital are increasingly important – not only to keep operations running, but to help safeguard future growth plans. Through our £22bn Barclays Business Prosperity Fund and sector specialists across the country, we’re here to provide businesses with support to navigate this uncertainty.”

Resilient confidence amidst uncertainty

There is a marked divergence between how leaders view their own firms versus the wider economy. While 78% remain confident in their own business prospects and 74% are optimistic about their specific sector, confidence in the UK (49%) and global (45%) economies is considerably lower.

Despite 80% of business leaders anticipating that geopolitical uncertainty from the conflict will restrict their investment and growth plans over the next 12 months, the expected impact is generally viewed as manageable. Only 11% report a significant constraint on plans, with the majority (69%) anticipating only a slight or moderate impact.

Matt Hammerstein, CEO of Barclays UK Corporate Bank comments: “Our data shows most business leaders expect the impact of the Middle East conflict to continue into the year ahead, meaning firms are having to manage immediate pressures while still planning for future growth. 

“In an environment of ongoing uncertainty, resilience and flexibility matter more than ever. Access to working capital, trade finance and cross border payment solutions can make a real difference – helping firms manage disruption today while remaining ready to invest and grow when conditions improve.”