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The results of a recent International Trade Survey of businesses

 

Survey Shows Mixed Impact from Sterling’s Fall

The results of a recent International Trade Survey of businesses by the North East England Chamber of Commerce have been released today (Monday, 6 February 2017).

North East businesses were asked what effect the fall in sterling had on their business and the results showed it represented both positive and detrimental impacts.

One of the most significant results, the impact on domestic sales margins, showed 40% of North East business had seen a negative impact in the past few months. While the effect on international trade export margins showed the fall of sterling has had a negative effect on 19% of North East respondents.

However, the results also highlighted over a quarter of companies had seen a positive effect on their export sales.

The findings revealed a concerning figure, that well over half of businesses expected the fall in sterling’s value to increase their cost base in the coming year. Linking to this, nearly half of companies expected they will have to increase prices over the next 12 months.

Ben Powick, policy adviser covering International Trade and Brexit at the Chamber, said: “The recent fall in the value of sterling has ignited a lot of debate around whether it has had a positive impact on businesses, both domestically and through international trade, on their exporting margins.

“This research has clearly shown exporters are experiencing both good and bad effects. Sterling’s value has had a significant impact on import prices, and as a manufacturing region we buy a substantial volume of goods from the EU in particular. Importers that are locked into contracts with suppliers abroad will have limited means to respond to the recent rise.

“It is a concern for our members that currency rates are expected to be volatile with the transition to Brexit occurring over the next few months. The government recently outlined a 12-point plan on the direction of the forthcoming Brexit negotiations with significant changes to come for exporters in terms of our trading relationship with the EU. Our businesses need to have the right level of support to ensure there is minimal disruption and cost to their trading activities.”

Darlington-based Beanies Flavour Coffee, one of the UK’s fastest growing brands of flavoured coffees, is stocked in Sainsbury’s and Tesco leading supermarkets and exports to 16 countries around the world. It employs 18 people at its County Durham base where 2 million jars of its innovative, coffee are produced every year. MD of this Chamber Global member, John Evans said: “The recent fluctuation in the sterling USD market has given our company some real issues with the cost of our major raw material, premium freeze dried coffee, experiencing a double digit increase as we purchase this in USD.

As an SME we are not able to lead in terms of seeking price increases in the market but need to wait for movement from the larger suppliers and then, maybe, we can seek to recover some of this increase.

Our company has spent a significant sum in recent years to increase our margins enabling us to be more competitive in the market place so the hike in the exchange rate is particularly disappointing.”