Currency concerning SMEs in 2018, suggests poll

Currency volatility will be the biggest talking point of 2018 as firms settle into the new year, a survey has found.

Bibby Financial Services (BFS), which published the poll, found that exchange rate concerns affect more than two-thirds of UK SMEs.

Around 67 per cent of businesses said they have been “adversely affected” by currency volatility in the past 12 months, owing to a loss in revenue of around £70,000 each.

It’s led to around 78 per cent of SMEs reviewing their foreign exchange arrangements to protect themselves against future volatility. Some businesses will also have the option of “locking in” to a guaranteed exchange rate.

Sterling has lost around 10 per cent in value against the dollar and around 13 per cent against the euro since June’s Brexit vote.

Logistics, duty, and VAT are among the other issues most concerning SMEs once Britain leaves the European Union in 2019.

Michael McGowan, managing director for Foreign Exchange at BFS, said: “By far the greatest challenge facing SMEs importing and exporting is currency volatility, sparked by the EU referendum and ongoing Brexit negotiations.

“While there is a common perception that a weaker pound benefits exporters, our findings challenge this binary narrative. Importing and exporting are not mutually exclusive and more than a quarter of SMEs that import sell finished goods or component parts overseas.

“As such, often importers and exporters are equally exposed to currency volatility and wider economic uncertainty.”