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How Brexit will slash the pound again
Although the sterling started 2018 as one of the top-performing currencies, the uncertainty of Brexit caused it to drop in value. Unfortunately, that’s not the end to the etching of the pound. More than a third of UK SMEs are preparing for the pound to fall sharply again, once our country leaves the EU in March this year.
In a recent survey by international payments company, WorldFirst, 34% of firms said they expected the sterling to fall by more than 10%.
“There is a worrying disconnect between what the UK’s SMEs are thinking will happen to the pound and what they are actually doing,” Jeremy Thomson-Cook, chief economist at WorldFirst, said.
According to analysts, the currency will be put under pressure if Britain moves out of the European Union without striking a deal on trade.
So, how exactly will a drop in the value of the pound affect your business?
What another drop in sterling means for you
"The day after the UK voted for Brexit, the pound suffered the biggest single day loss for a G10 currency in recorded history," said Fiona Cincotta, a senior market analyst at online trading platform City Index. "The pound could potentially replicate this decline."
The first hit to the sterling caused an increase in consumer price inflation (CPI), which was well above earnings-growth. This means consumers are able to spend less, which has seen UK SMEs struggle. The only advantage to a drop in the pound is for export-oriented businesses, as this means international buyers are getting more for their money.
If the sterling falls sharply again, we will likely see the same mix of disadvantages and advantages for SMEs.
How to prepare for Brexit
Brexit will see the pound drop in value and an increase in your business bills. This means we all need to become more financially savvy and improve the efficiency of our workforces.
To help you do this, the government is investing in apprenticeship programmes, as well as research and development. For information on how to claim funding for research and development, and how this can grow your business, read our research and development tax reliefs article.
Another way to help you make savings is to stay on top of your business utilities. To help you with this, we’ve created a Do It For You service that ensures you’re always on a great price, without you having to do any of the work.