With under two weeks to go to the referendum, uncertainty about which way the vote on membership of the EU will go is causing considerable uncertainty for business, with research suggesting many are holding back on investment decisions and face challenges because of sterling volatility
A poll conducted by international currency exchange specialist SmartCurrencyBusiness.com suggested the referendum outcome is likely to be close, as it found 50% of respondents were planning to vote for the UK to remain in the EU, while 47% were planning to vote to leave.
Carl Hasty, director of SmartCurrencyBusiness.com, said: ‘Despite the uncertainty surrounding the results of the EU referendum vote, one thing is certain in financial markets: these markets are volatile. Sterling markets have seen significant shifts as the pound has strengthened and weakened in accordance with public opinion on whether the UK will leave or remain in the EU.
‘We expect sterling volatility to continue as we approach the referendum vote, with swings either way. Businesses with international payments could potentially be hit hard by adverse currency exchange rates, especially if they do not have robust risk mitigation strategies in place.’
Hasty warned sterling could continue to struggle in the event of a Brexit because of the uncertainty about what would happen, and said: ‘Businesses need to plan ahead to ensure that they have a suitable strategy and contingency plan in place to avoid the risks this volatility poses to their profitability.’
Separate research from Capitalise.com and PKF found that 40% of the SMEs it surveyed admit the approaching referendum has already impacted business investment decisions, with 15% postponing entering into new business relationships, ahead of the vote.
Paul Surtees, managing director and co-founder of Capitalise, said: ‘While we would expect confidence amongst SMEs to be shaken, to hear that one in three has already changed its investment strategy is indicative of just how fragile our small business economy is when faced with such uncertainty.’
Almost a third of small business leaders surveyed claim they have a high level of understanding of the implications of a potential Brexit on their business, while more than one in six has contacted their accountant for Brexit advice.
Chris Clay, business adviser at PKF’s London office, said: ‘With the most prominent economists struggling to forecast the ultimate impact of “in” or “out”, the accountancy profession is under pressure to work more closely than ever with clients and be a true extension to their business.’
The SmartCurrencyBusiness EU Referendum potential outcomes for business infographic is here
