SMEs playing catch up on sterling depreciation
The Office for National Statistics’ (ONS) figures give good insight into how small and medium sized exporters have reacted to the fall in sterling versus their larger counterparts. While both saw a similar impact on exports, large companies reacted more quickly to take advantage of the fall, with SMEs not catching up until the early part of 2017.
Since the Brexit vote, there’s been an often volatile depreciation of sterling against major currencies around the world, which has made imports into the UK more expensive, and exported goods relatively cheaper.
For manufacturers importing raw materials and components, this has meant a significant rise in costs, with average import price inflation rising to as high as 18.9% during the period. While there were some opportunities to pass these prices onto customers, there was, in many cases, a time lag in being able to do so.
With any economic change, there are always winners and losers, but with exchange rates unlikely to return to their pre-referendum levels anytime soon, it’s important for manufacturers across all industry sectors to continue to exploit current export markets as much as possible, and identify new opportunities.
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