As reported by Bloomberg, a large portion of UK small firms are unprepared for a significant drop in the face value of the British Sterling post-Brexit, according to a WorldFirst report.
Key highlights
Payment-settlement firm WorldFirst released a report on Tuesday that highlighted a one-in-three expectation for a 10% or greater drop in the GBP post-Brexit amongst small-to-medium-sized businesses (SMEs), yet almost none of them are prepared for the increasingly-likely event.
20% of SMEs believe that the GBP could reach parity with the EUR, or fall even further following Brexit, a historical first for the queen’s currency, yet 95% of SMEs have no plans in place to cope with such an undervalued currency according to WorldFirst.
The WorldFirst report highlights growing possibilities for business disruption within the UK following Brexit, and time is running out for UK Prime Minister Theresa May to secure a workable deal in time.
13% of SMEs plan to cut payrolls in the event of a no-deal Brexit according to the report, and less than 20% are planning on reassessing their growth plans in the event of a hard divorce; last month’s survey of foreign-exchange strategists called for an 8% decline in the GBP, while respondents expect a 6% rally should PM May secure a last-minute deal, but either way, UK firms are drastically underprepared as SMEs bury their heads in the sand in the run-up to Brexit day next March.
“It is almost like the majority of British SMEs have heard the weather warnings and seen the dark clouds gathering, but still need to see the first drops of rain to believe the storm is actually coming their way,” said Jeremy Thomson-Cook, chief economist at WorldFirst. “There is a worrying disconnect between what the U.K.’s SMEs are thinking will happen to the pound and what they are actually doing.” – Bloomberg
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