SMEs doomed if sterling persists

SMEs doomed if sterling persists
Jon Mainwaring Disaster is facing the UK’s small-to-medium-sized enterprises (SMEs) as the pound persists at its current high level, according to the Engineering Employers’ Federation (EEF). Meanwhile, the director general of the British Electrotechnical and Allied Manufacturers’ Association, David Treadwell, told EW that he was also concerned: “BEAMA has been lobbying the government to explain that the level of the pound is causing our members difficulty.” In its recent 1998 Budget Representations, the EEF explained that the weakened competitiveness due to currency levels had already lost export business and eroded profit margins. But now cash flow, the key indicator of health in a sector dominated by SMEs, is under severe pressure. The EEF is concerned that SMEs now face a ‘stark choice’ between continuing to trade in hard won export markets at a loss, or withdraw from these markets with little likelihood of re-entering them for a considerable period. “As annual or long term contracts come up for renewal, the increasingly adverse effects of sterling’s overvaluation will become more evident,” said EEF director general Graham Mckenzie. “Growing import penetration and the consequences of the turmoil in South East Asian economies will compound these factors.” The EEF says that the high level of the pound is prompting many overseas competitors, particularly Asian firms benefiting from a weak currency, to move back into the UK market.


Leave a Reply

Your email address will not be published. Required fields are marked *

*