Sterling volatility a concern for exporters

Posted on 20 Sep 2018 and read 397 times
Sterling volatility a concern for exportersThe British Chambers of Commerce (BCC), in partnership with DHL, has published its latest Quarterly International Trade Outlook, based on surveyand documentation data from UK exporters.

The Outlook indicates that many exporters are performing well, but economic and political factors are weighing on them.

The survey — of over 2,600 exporters — found that confidence in future operations remains strong, but external economic and political factors are having an impact.

The results show that 60% of exporting manufacturers were more concerned about exchange rates in the second quarter of the year than in the first quarter.

There was also increased concern expressed by 43% of service exporters, highlighting the broad impact of the weakness of the pound.

The Outlook says the findings indicate that while price pressures eased slightly on exporters during the second quarter of the year, those manufacturers under pressure to raise prices reported the cost of raw materials as the leading factor (81%).

Service firms believe the cost of raw materials (39%) and other overheads (51%) are the leading sources of cost pressure.

The escalating labour shortage in the UK is also having a serious impact on exporters, with 69%
of manufacturers seeking to recruit struggling to find staff.

The surveys says that many UK exporters are maintaining their competitiveness in foreign markets, with healthy sales and order books, but the weakness of the pound is increasing the cost of raw materials imported from abroad.

With growing tension around the nature of the future UK-EU trading relationship and escalating trade disputes with key partners such as the USA, the Government must do all it can to maintain confidence and take unilateral action to improve the domestic business environment wherever possible.

Adam Marshall, director general of the BCC (www.britishchambers.org.uk), said: “These are unusual times, and the escalating political and economic turbulence doesn’t go unnoticed by business.

“It’s been a summer of trade tensions and endless Brexit bickering, and exporters are particularly exposed to the consequences of that turmoil.

“Companies will always find a way to trade with each other, but messy negotiations and the threat of higher tariffs have implications and can hit confidence — and firms’ bottom lines.

"While many exporters are making the most of their competitive advantage in foreign markets, the fall of sterling also puts considerable pressure on the cost of imports, and the volatility can make it difficult to plan.

“The UK Government can’t control currency or the actions of trading partners, but it can take steps to mitigate the level of uncertainty at home.”

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