By Marcus Leach

British importers’ and exporters’ confidence has retreated in the UK economy, trading overseas and the prospects of future growth, according to a survey released by Travelex Global Business Payments.

The Travelex Confidence Index, a measure of UK trade confidence, dipped two points in June, as the unfolding Greek crisis and UK inflation fears damaged business confidence.

Nearly a third of UK SMEs trading internationally (31%) said that the UK economic situation has worsened over the last six months, up 35% since May (23%). Deteriorating conditions in the Eurozone also impacted confidence in future trading conditions, as there was a 12% drop in the number of businesses confident that trade conditions will improve over the next 12 months (May: 68%, June 60%).

According to the report, many SMEs highlighted inflation as a major source of concern. Seventy per cent of exporters are alarmed that further increases in inflation will negatively impact their competitiveness abroad and adversely affect their business. This is up 11% since May (63%).

“The fall in trade confidence, evident from June’s index, has been largely impacted by rising UK inflation and the debt crisis we are witnessing in Europe; the UK’s main trading partner," David Sear, Global Managing Director at Travelex Global Business Payments said.

“UK SMEs are already finding it difficult to trade profitably with Europe, due to a continuous pressure on margins and bottom line, and are now anticipating further struggles. With the threat of default and collapse across the channel, it is no wonder that importers’ and exporters’ expectations over the next six to 12 months have dropped this month.

“UK inflation has been above the 2% target since December 2009 and is working against an export-led recovery as it is negatively impacting exporters’ competitiveness abroad.”

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