Importers hit by poor exchange rate
Small business threatened by weak pound
A million small and medium sized businesses could be under threat due to the weak pound, new research suggests.
A survey of businesses by Moneycorp showed that some 25% of small companies believe their business will be threatened if the pound continues to fall.
Over two thirds of importers claim the weak pound has already had a ‘significant’ or ‘serious’ effect on their business.
Mark Deans, dealing manager at Moneycorp said: “The pound’s vulnerability is one of the most troubling aspects of the current economic climate for importers. Other major currencies like the euro, dollar and yen have remained fairly buoyant, but confidence continues to drain from the pound.”
The pound has fallen 20% against the Euro and 25% against the dollar this year.
Some 56% of small importers expect the pound to continue its decline and have placed forward contracts to sell sterling for delivery at a later date.
Deans continued: “We expect the Bank of England to attempt to counteract the economy’s expected deep and prolonged contraction by cutting interest rates to a new record low in January – which is likely to discourage further investment in sterling.”
© Crimson Business Ltd, 2008