By Daniel Hunter
The future of both the pound and the euro are in question according to new research of UK small businesses.
The research, carried out by currency specialist Moneycorp, reveals that a third (33%) of small to medium sized enterprises (SMEs) think that the British pound will be replaced in the next 20 years.
Despite the government’s hopes for an export-led recovery based on a weak pound, more than two-thirds (68%) of small business owners claim that they have not seen a rise in export sales from a weakened Sterling.
A further two-thirds (66%) do not believe that the British government is doing enough to support SMEs and a quarter (26%) of those surveyed do not think the pound will strengthen.
Almost half (41%) of the small business owners surveyed believe that the eurozone will cease to exist in its current form, with Greece topping the list of countries expected to leave the single currency, followed by Ireland. A third (33%) of SMEs has gone so far as to put contingency plans in place for if the euro disappears.
“Though small businesses have been pinpointed by the Government as the lifeblood of the UK economic recuperation, few of them are actually benefiting from the policies put in place," Chris Redfern, currency dealer at Moneycorp, said.
"Their fears have not been allayed by promises of an export-led recovery and a third of them are uncertain about the future of the pound. The result is a confusing situation which is impacting their operations overseas.”
Small businesses are fully aware of the impact of continued currency fluctuations on their bottom line and business growth, with eight in ten (80%) considering currency strength an important part of their decision to expand overseas and almost two-thirds (61%) accounting for currency fluctuations in their budgeting plans.
Currency fluctuations are cited as the biggest hurdle for operating overseas (24%), followed by language barriers (19%). Almost half (44%) are unclear about the possibility of the pound strengthening against other currencies in the next six months. However with just over a quarter (27%) choosing to consult a currency specialist when dealing with currency overseas, there is more they could be doing to mitigate against the risks involved.
Some positive news comes from the fact that three-quarters (73%) of the SMEs surveyed are confident about their business prospects this year, with Europe still offering the most potential to UK business.
“The turmoil that has continued to plague the eurozone for the last two years, combined with a fluctuating pound has led to uncertainty among small business owners about the future of the established currency arrangement," Redfern continued.
“Being aware of the risks involved in doing business overseas is the first step in countering the impact of currency fluctuations. Planning ahead, establishing forward contracts and getting the right advice, will be key in steering SMEs through future foreign exchange storms.”
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