SMEs that trade internationally are at risk of being plunged into confusion over currency volatility amid the UK’s first EU membership referendum.
This is according to currency experts World First, which polled more than 1,000 senior decision makers at UK SMEs that make cross-border payments. The survey found that three quarters (75 per cent) fear that currency volatility stemming from the planned European referendum will impact their business.
However, less than half (47 per cent) take any notice of foreign exchange markets and 35 per cent don’t think that having a currency strategy is important.
Lack of understanding
The study also revealed that small and medium-sized firms are dangerously exposed to currency fluctuations, with 45 per cent admitting they have been affected by sudden exchange rate changes and 25 per cent saying they were severely affected.
Forty three per cent said they did not understand the impact forex movements have on their business, while more than half (51 per cent) are scared by the prospect.
CEO of World First, Jonathan Quinn, said: “Given that SMEs are the engine-room of the UK economy and key to our international trade, more needs to be done to ensure they are adequately protected from currency swings caused by events such as the EU Referendum.
Greater clarity and support needed
“Specifically, whilst there is a lack of clarity about the exact timings of the EU Referendum, SMEs should take the initiative now to help mitigate against the risks of currency volatility that we’ll likely see in the run up to the eventual day votes are cast.
“Supporting UK SMEs on the journey to become mini-multinationals is at the heart of the government’s plans to rebalance the economy and to drive the competitiveness of our exporters.
“Therefore, collectively, the industry and policy makers need to better educate businesses on the benefits of a well-managed currency strategy, as well as providing specialist advice and products that can help our nations’ business thrive on the international stage.”