Business Electricity Meter Types
There is a wide range of electricity meters that your business may have installed, depending on your electrici...Read More
The sterling exchange rate was volatile around the election, losing value during the campaigning then rapidly gaining as the likelihood of a Conservative majority increased. The implications can be significant for a small business: the around 4% drop in value from the end of April to the end of the election works out at a loss of around €11,000 on a €200,000 payment.
While currency values are notoriously hard to predict, there reasons for changes are usually straightforward. “It’s all about uncertainty,” says Tom Higham of Foreign Currency Direct. “Markets don’t like uncertainty and the expectation of a period of political limbo following a hung parliament was putting downward pressure on the value of sterling.”
The largely unexpected Tory majority ended the prospects of a coalition government, pushing up the value of sterling by around 2% in the course of a single day. That may not sound like a lot but is actually an unusually large change. The increase in value is due to confidence in Conservative handling of the economy, says Higham. “We’ve seen the economy back on track due to the last government’s decisions. “Their record is not perfect but the market clearly expects those positive steps to continue for the next five years.”
The consequences for businesses are split by business types. Broadly, those importing gain from a strong sterling and those exporting lose out (and vice versa). “The Eurozone is the UK’s biggest trade partner so buying from there more cheaply is very good for many people. But exports of goods and services become more expensive,” Higham adds.
The winners and losers could soon be reversed if uncertainty about the UK’s membership of the EU lingers (as seems likely given the Conservatives’ promise for a referendum). “Again, uncertainty means a downward pressure on sterling value. Leaving the EU would likely put up barriers, which would be bad for business. Being in the EU means strong trade links.”
Higham advises businesses benefiting from strong sterling rates to fix the rates while they are still favourable. “Things can change so fast … Sterling values could increase further if something goes wrong but that is a big gamble. Businesses could find fixing a rate now to be a prudent move.”
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I've used Switch My Business for a few …
"I've used Switch My Business for a few years because they literally do everything for you with no fuss. Mark Weeks was incredibly helpful, friendly and understood how busy I was. He explained everything simply, clearly and found rates that matched my needs perfectly (needed a 0 fee standing rate gas supply). He prepared all the paperwork so all I had to do was print, sign and scan. Highly recommended!"This review was posted by Jay Grocott on the 06th of December 2017
Mark Weeks is very informative of the …
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Mark Weeks provided quotations for my …
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