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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.”
"Very easy. Bea Luseni very efficient & knowledgeable."This review was posted by Alan Duffy on the 31st of March 2017
Super helpful and easy to work with
"Recommend this company in a heartbeat - Nicole Borneuf was super easy to talk to, was not pushy in the slightest, very helpful and replied with all my questions very professionally and did all she could to help. I had to deal with a few companies to sort my business energy out, all but Nicole were too pushy for my liking and I refused to follow through with them. Thank Nicole - you are a credit to your company, thank you for making the stressful energy change so easy."This review was posted by Mia Drew on the 29th of March 2017
An Extremely Competent Company
"Switch my business has not only helped my SME secure a good energy deal for the second year running but Jessica swiftly found a alternative supplier for me when I was let down on the day of switching by the new contractual provider I had chosen some 4 months previously. Being suddenly out of contract and without provider is everyone's energy nightmare. Greatest thanks."This review was posted by S McMillan on the 29th of March 2017
Helpful, friendly and we saved lots of money!
"Jessica Purnell was helpful and friendly, she made the whole process easy and simple AND we saved lots of money thanks Jess"This review was posted by Melanie Baker on the 23rd of March 2017
Quick & Easy
"Kabibi was very helpful and the whole process was very efficient. The one small reservation I had was that I was phoned up by Kabibi almost immediately having received my online quote - which wasn't enough time for me to finish reading the quotes! Fortunately she was able to assist me in a greater savings on both Gas & Electricity, and so as long as the switchover is seamless I will remain very happy with the service."This review was posted by Amanda Brown on the 21st of March 2017