While the future of UK business remains uncertain following June’s EU referendum the resulting plunge in the value of £Sterling is already showing dividends for some.
Among K2’s clients is a metal fabricator, which has been very busy supplying clients in both the UK and in Europe with specialised products from its factory. Fortunately, they have benefited from holding a large stock of steel bought pre-referendum.
In the UK, there are signs also that businesses selling high end goods have been benefiting from the increasing numbers of overseas tourists who have been taking advantage of the favourable exchange rate to indulge in some retail therapy. Equally, the car dealerships appear to have been holding up well despite the uncertainty.
The lower value of £Sterling clearly benefits companies selling not only into Europe but also exporting elsewhere as well as those businesses, such as retail and tourism, who are attracting overseas visitors.
… and the losers?
Some businesses, however, are already having to increase their prices because they need to buy parts or raw materials from abroad.
We know of one small specialist in repairing Apple computer hardware who has had to raise prices because of an increase in the cost of buying certified Apple replacement parts.
In addition to the devaluation of £Sterling on the currency markets, which clearly benefits exporters, there are also signs that commodity prices have started to stabilise and are coming out of their long recent slump, so, for example, fuel prices have started to increase at UK petrol pumps, perhaps helped by the recent OPEC decision to limit oil production and exports. Indeed, the impact of exchange rates and increase in the $USD cost of fuel will be painful for many where reports are of a likely 50% increase in £Sterling price of fuel.
This is likely to put added pressure on costs for any UK business that needs to use vehicles, whether it is for deliveries or for transport to on-site working as is the case for many small suppliers of domestic services such as electricians, plumbers, gas engineers and the like.
The increase has also shown in the latest Consumer Price Index (CPI) rise in inflation, published by the Office for National Statistics (ONS). It revealed that inflation had risen to 1% between September 2015 and 2016, the highest 12-month rate since November 2014. The ONS cited increased fuel, hotel and restaurant prices as the main influences.