Unpredictable foreign exchange rates continue to challenge small UK business owners in the wake of last year’s Brexit vote, with importer confidence damaged most from current conditions, new research from American Express has shown.
The fall in the value of the pound over the last year has seen the profit margins of smaller UK importers squeezed by 13 per cent on average, while 81 per cent have seen their business negatively impacted as a result of the Brexit vote.
The majority of small import–only firms – 61 per cent – have had to increase prices on goods and services, with an average hike of nine per cent. Meanwhile, a lack of importer confidence has meant a third of firms have made plans to increase prices over the next year.
The research, conducted by American Express and analysts East & Partners, revealed a different picture for smaller UK exporters, who were found to have mostly benefitted from the fall in the pound’s value.
Out of more than 2,000 small business owners questioned in a survey, nine out of ten small exporters claimed their margins had gone up – by 16 per cent on average. Some 95 per cent of small UK businesses that are already exporting intend to ramp up exporting plans further in the next year.
The study found that small UK businesses currently participating in both importing and exporting activities were most confident. As many as 95 per cent of these businesses owner also said they’d experienced a positive business impact from the fall in sterling’s value.
Commenting on the data, senior vice president for European global commercial payments at American Express, Jose Carvalho, said: “Those already involved in exporting are seeing the business benefit, and whilst others currently focused on domestic activity might be daunted by the idea of exporting there are plenty of resources out there for ambitious businesses.
“Exchange rates have a huge impact on UK SMEs with an international footprint, and on their ability to maintain their place in the local and global economies.”
Many UK businesses owners still have concerns about the impact of fluctuating exchange rates, despite some having benefitted from a fall in sterling’s value. Over a quarter of respondents to the survey said that currency volatility posed a threat to future trading, while a similar number envisaged having cash flow issues.
Roughly 30 per cent of small company owners trading internationally revealed they couldn’t currently predict what they’d earn from a 30-day invoice.
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