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UK Economy: British Businesses Split

British businesses are split over the health of the UK economy, with worries about the strength of Sterling and the Eurozone heavily affecting SME business confidence. According to data from the Western Union Business Solutions International Trade Monitor (ITM), which has surveyed over 660 UK SMEs, view on the health of the UK economy are split.

On the one hand, 54% of SMEs state that they have confidence in the economy and its recovery, whereas 45% believe the opposite. There is more confidence in the global economy, with 65% of businesses saying they were confident that international trade conditions would remain strong in comparison to the 34% responding otherwise.

Jonathan Rees, UK regional divisional director of Western Union Business Solutions, commented; “The split between small businesses’ view on the health of the UK economy suggested that while some SMEs are doing well and recovering, others are struggling in the face of cheaper international competition, decreasing sales and increasing production costs.”

Indeed, worries about currency volatility have hit an all time high, with 61% of businesses highly concerned about the changes in exchange rates, compared to 49% in Q4 of 2012. Currency fluctuation is now the third most concerning issue for SMEs, behind the health of the economy in first place (with 79% of businesses worried about this) and cheaper competition (64% of businesses). Indeed, since the start of 2013, Sterling has been unstable against both the dollar and the Euro impacting on SME cash flow and buying power and creating real issues for SMEs.

Rees continues; “British SMEs are right to be concerned over currency volatility. While a weaker pound could help exported, it will also have an impact on production and import costs. The majority of importers we spoke to also import, which means more must be done to help SMEs manage their international cash flow and ensure that potential gains made by a weaker pound are not off set by equal or greater losses.”

 

 

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