Although the majority of SMEs in the UK have faith in exports leading the economic recovery, nearly 25% say they are going to decrease their international trading activity.
More than 33% of SMEs also said their confidence in trading internationally is diminishing. Currency fluctuations were cited as the main reason for declining confidence by over 50% of UK SMEs. UK SMEs do the majority of their international trade with EU countries such as Germany, Poland and Spain and the volatility of the Euro could have a serious impact on the economic recovery.
Despite expressing concerns about currency fluctuations, 55% of SMEs have no protection against them and risk losing up to £19,745 per year. Across the entire country’s SME market, that adds up to a potential loss of £20.4 billion.
Nearly 20% of SMEs said they were unaware of the benefits of protecting their business against currency volatility and another 28% said they had not thought of it at all.
Not surprisingly, UK SMEs have cut back dramatically on trading with Greece. The EU gave a large bailout to Greece just last year but the nation is in trouble again and some commentators think Greece will default and leave the Euro altogether.
Trade with Greece has dropped by more than 20% in the last 12 months but SMEs are actually better placed than their larger counterparts to react quickly to this sort of situation. Small businesses can change their business model and switch suppliers more easily thus limiting their exposure to risk.
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