Yesterday (10th Sept 2019) parliament officially shut down until the 14th October 2019 – the technical term is prorogation of parliament. This doesn’t mean they are all off to enjoy their summer break, but rather trying to sort out this complete mess which has developed over the last three and a bit years.
Boris Johnson is still fighting for a General Election which, if successful, would give him a majority in parliament and allow him to push through Brexit. This is easier said than done, of course. Opposition MPs have agreed to a GE but only once the ‘No Deal’ option is removed from the table. The house has now rejected his GE demands not once, but twice in the last week, and he lost his parliament majority too after he ejected 21 Conservative MPs from the party. The ‘rebels’ tried to back a motion which would block leaving the EU without a deal – at least in the near term.
We now once again find ourselves in a state of limbo not quite knowing if the UK will indeed depart the EU on the 31st October, or whether the preverbal can will be kicked further down the road. Either path poses problems for UK-based SMEs.
Leaving without a withdrawal agreement on the 31st October effectively means the UK will be trading on WTO rules the very next day. Even the most purist of Brexiteers must admit this will cause all kinds of havoc, in the short term at least. That said, businesses simply need clarity, whether that’s with the UK leaving the bloc without a deal or not. Continuously moving the divorce date just prolongs this issue and leaves SMEs unable to plan moving forward.
For those businesses dealing overseas, there is a long list of areas they need to concentrate on, including staff recruitment, small business finance, UK growth and trade agreements to name but a few.
Another area of concern is how to manage their cross currency exposure during such volatile times. Many SMEs are run on very tight margins, and if they are heavily exposed to foreign currencies then even small movements in Sterling can have serious impacts on their bottom line. FX specialists such as moneycorp can assist with reducing, or eliminating this risk for businesses.
By fixing their FX costs allowing them to offset those costs against other costs in the business can give some amount of protection and peace of mind. Hedging FX exposure is not just for the large global organisations. It was reported that 80% of UK-based SMEs has no hedging policy in place over the referendum vote in 2016. Regardless of the size of business, protecting profits should be of paramount importance and reducing costs whilst hedging FX exposure is a very easy way to do that.
As a strategic partner of ActionCOACH, Moneycorp is always happy to sit down and discuss each client’s cash flow and help wherever they can.
For all enquiries, please email: CorporatePartnerships@moneycorp.com
or call +44 (0)203 823 0526 (quoting ActionCOACH).