WorldFirst’s latest Global Trade Barometer shows a significant slowdown in international trade, as UK SMEs transfer 17% less on average per currency transaction in Q1 2017 versus Q4 2016 – a fall from £48,000 to just £39,000.
When asked, two in three (64%) SMEs said they did not make a foreign currency transaction in Q1 2017, rising significantly from 28% in Q4 2016. 30% reporting that they felt the negative impact of exchange rate movements.
The decline in international trading looks set to continue with only a quarter (25%) of SMEs planning to export in the next quarter, compared to a third (33%) who currently do so. Declines are expected across major regions and with major trading countries.
|Region||% of SMEs currently exporting||% of SMEs with plans to export|
|North America (excludingUSA)||10%||8%|
|Africa & Middle East||9%||6%|
|South East Asia (excluding China and South Korea)||7%||4%|
|Rest of Asia (excluding India)||6%||4%|
Despite expectations of further volatility, three in five (59%) of UK SMEs have no plans to protect themselves against future currency volatility. This is despite 37% of SMEs saying that a further fall in sterling will negatively impact their business.
Jeremy Cook, Chief Economist at World First, commented: “The volatility of foreign exchange markets over the past twelve months, combined with the political and economic uncertainty has made the task of approaching foreign exchange markets with clarity and confidence even more difficult. Rather than address the issue of currency volatility, many SMEs seem to be burying their heads in the sand. The lack of forward planning amongst SMEs is leaving them susceptible to future shocks that could have a significant impact to their bottom line – we only need to look towards June’s UK general election as another potential flash point.”
Top 5 Business Concerns Shared by UK SMEs
- Rise in inflation
- Fall in consumer spending
- Currency volatility
- Change in government policies
- Increase in business rates