A new Chamber of Commerce survey reveals that a majority of businesses expect the fall in sterling to increase their costs.
The British Chambers of Commerce survey, which included members from West & North Yorkshire Chamber, found that 63% expect costs to increase in the next 12 months as a result of the sterling devaluation. This includes a quarter (24%) who expect costs to rise significantly. In comparison, only 6% expect costs to decrease. Almost three-quarters of manufacturers (73%) and business-to-consumer firms (71%) anticipate costs increases, compared to 55% of business-to-business firms.
The Chamber says that many businesses trading abroad are leaving themselves exposed to currency fluctuations, with nearly half (46%) of the survey respondents not taking pro-active steps to manage currency risk. Smaller firms are less likely to be managing risk (44% with under-10 staff, 70% with 50-249). Manufacturers have the highest proportion managing currency risk (76%), compared to B-2-C (57%) and B-2-B (39%).
The survey highlights the extent to which the depreciation in sterling is expected to compound the price pressures on firms, underlining the need to ease the domestic cost of doing business. There is also a clear need for more support and information for exporting businesses on the importance of managing currency risk.
Mark Goldstone, Head of Policy at West & North Yorkshire Chamber of Commerce, said:
“While businesses await answers on Brexit, and a return to a stronger currency, they must take steps to prepare for risk. For those trading internationally, it makes sense to explore the options to insure against currency fluctuations. Companies are feeling price pressures from sterling’s depreciation. Following on from the steps taken in the Budget to act on business rates, further actions are needed on the upfront cost of doing business, so that firms can alleviate currency pressures. Weak sterling reflects the current climate of political uncertainty and lack of clarity on the Brexit process. A clear strategy from government about the nature of the UK’s future trading relationship with the EU would go a long way to reassure and stabilise markets.”
Other key findings include:
- The most common forms of managing currency risk are invoicing in sterling (27%), opening foreign currency accounts (15%), and waiting for an advantageous rate and buying using the spot market (15%)
- Less than a quarter (24%) of businesses say they have a complete understanding of the types of international payment methods available, with 23% saying somewhat and 13% none at all
- The biggest challenges businesses face in making or receiving international payments are delays (21%), bad or misleading exchange rates (16%) and hidden fees (16%)
Notes to editors:
- In September and October 2017, the BCC surveyed 1,300 business people from all UK regions to understand how the devaluation of sterling is impacting on businesses, and whether they are taking action to mitigate currency risk.
- The BCC sits at the heart of a powerful network of 52 Accredited Chambers of Commerce across the UK, representing thousands of businesses of all sizes and within all sectors. Our Global Business Network connects exporters with nearly 40 markets around the world. For more information, visit: britishchambers.org.uk
- For more about West & North Yorkshire Chamber of commerce, visit http://www.wnychamber.co.uk/