Small UK businesses fear EU referendum currency swings
A large number of smaller UK businesses trading internationally are concerned about potential swings in the exchange rate caused by an EU referendum, according to new survey figures published today.
The survey of over 1,000 senior decision makers at small and medium-sized enterprises (SMEs) revealed 75 per cent of them feared currency volatility related to the EU referendum would impact their business, the data from foreign exchange firm World First shows.
Businesses remain unprepared for big swings, with 45 per cent saying they ave been caught out by a sudden movement in exchange rates before while 35 per cent said having a currency strategy is not important.
Nearly half of SMEs trading internationally said they did not fully understand the impact a change in exchange rates would have on their business and 51 per cent said currency markets “scare” them.
World First estimates that UK SMEs made international payments of £78bn last year, or an average of £256,700 per businesses.
“2015 was one of the most unpredictable years in currency market history and there is little reason to expect change in 2016. With the EU Referendum hanging like an economic Sword of Damocles, there is an enormous degree of uncertainty and concern in markets and therefore it’s crucial that any business operating internationally has a clear strategy for managing their currency exposure,” said World First chief economist Jeremy Cook.
“One only has to look at the precedent set by the Scottish Referendum, which saw sterling lose around 6.5 per cent against the USD in the two months before the vote, to realise how great a threat this could be to the mini-multinationals who don’t have the balance sheet strength to absorb such major shocks. This situation is made all the more grave given the widespread lack of appreciation on how such rate movements impact the bottom line.”