By Carl Hasty, Director of Smart Currency Business
Given the uncertainty associated with trading in the Eurozone over the past two years as the debt crisis rumbles on, UK firms may increasingly look to limit their association with Eurozone trade in favour of stability and better growth opportunities in other international markets. And new concerns regarding a two-speed economy within the bloc are only intensifying the appeal of alternative trade partners.
Reports today suggest something of a north-south divide within the Eurozone, where businesses in the likes of France, Germany and the Netherlands are benefiting from lower borrowing costs and improving access to trade finance. However, the reverse is true in hard-hit Mediterranean countries, where companies are suffering at the hands of stubbornly high interest rates and a rapid drying up of the pool of bank funding.
A disunited Eurozone economy will undoubtedly have ramifications for the value of the Euro, which in turn will impact on the potential for UK firms to recover from the economic malaise. More moderate exchange rates, combined with superior growth prospects and an increasingly business-friendly regulatory environment make China and Russia, for instance, much more appealing avenues of achieving business security.
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