The impact of the U.K.’s historic vote to leave the European Union on the U.K. economy is still anyone’s guess, but U.K. importers are already feeling the pain.
That’s according to Covercy, a cross-border business payments service, which said in a press release on Friday (Sept. 23) that the decline in the sterling since the vote means increased costs for U.K. importers to conduct business. According to Covercy, since Brexit, the sterling plunged to a 31-year low against the dollar and dropped 10 percent in trade weighted value. What’s more, overall, the currency is down 16 percent year on year against the dollar and 18 percent year over year against the euro. The steep declines in the value of the sterling mean, currently, U.K. importers’ costs to conduct business have increased 16–18 percent. At the same time, EU imports decreased sharply in July.
“Importers have seen the cost of doing business shoot up to unprecedented and worrying levels, which actually threatens their survival. This week alone, the pound fell further by 2.5 percent against the euro and dollar, severely hampering British importers’ abilities to do business even further,” said Doron Cohen, CEO of Covercy, in the press release. “However, the one positive trend to note is that non-EU Imports for July totaled £20.2 billion, an increase of over £500 million compared with the previous month, when the referendum vote occurred. This points to British importers looking beyond Europe and seeking to open up new trade routes with international partners in order to offset the damage of Brexit and keep their businesses afloat in this turbulent time.”
The company went on to note that, in the post-Brexit world, importers have been paying well over the odds for international payments, hurting their ability to expand.