UK Small Business Preps for Brexit with Growing use of FX Hedging
(13 December 2017 - United Kingdom) As UK business prepares for Brexit, small firms are managing their FX risk more and more as they look to increase trade internationally, and exporters forecast increased growth in FX turnover, according to East and Partners latest UK Business FX Market Analysis report for the second half of 2017 released this week.
FX Risk Management
A quarter of micro businesses and over 40 per cent of SMEs used Forward FX in the second half of 2017, an increase of 16 and 15 percent respectively over the last six months. Larger business is also using hedging options on a more regular basis, with nearly half indicating their use.
“Awareness and understanding around the benefits of FX risk management solutions has clearly hit home with UK small business, leading to record highs in its usage” said Simon Kleine, East and Partners Europe.
Barclays, HSBC and Citi dominate the UK Business FX Market with relationship share growth across all products in the Lower Corporate segment. International challenger banks, Bank of China and Santander, along with non-banks Monex, SAXO and Western Union also continue their growth in the FX risk management space.
Business Growth
East’s six-monthly UK Business Foreign Exchange Market Analysis report for the second half of 2017 found that Exporters are forecasting increased growth in their FX turnover in the next 12 months, and all business is forecasting an increase in the percentage of their FX turnover they hedge with a market wide increase of more than 4 per cent.
With an eight percent shift away from the EUR€ and a marked 15 per cent increase (38 per cent excl. RMB) in the use of currencies other than the USD$, businesses are increasingly looking to trade with new international markets.
“UK business is obviously looking beyond Brexit and at the opportunity presented. They’re focusing on growth but, importantly, are doing so in a balanced way taking a measured, sustainable and more risk adverse approach” said Kleine.
| East & Partners Europe Business Lead Simon Kleine t: +44 7455 169469 e: simon.k@eastandpartners.com |
East & Partners Europe Client Service Executive Sarah Farrell t: +44 7808 799702 e: sarah.f@eastandpartners.com |
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| www.eastandpartners.com | |||
Methodology
This research is from the eighth round of East &Partners UK Business FX Markets Analysis research, a six-monthly research program. In total 2,211 UK enterprises from Micro, SME and Lower Corporate segments were interviewed directly by telephone in November 2017. Interviews were conducted with the CFO, Business Owner, Corporate Treasurer, Company Accountant or designated FX officer using a structured questionnaire.
The report analyses FX market dynamics across Micro Business, SME and Lower Corporate segments, the program applies the following business segment annual enterprise turnover bands:
Micro Business: GBP£1-5m annual turnover
Small to Medium Enterprises (SME): GBP£5-20m annual turnover
Lower Corporate: GBP£20-100m annual turnover
Of the companies interviewed, 62.3 percent were both importers and exporters, 21.3 percent were solely importers and 16.4 percent solely exporters.
The interview sample was dispersed geographically across the UK and the sector distribution reflects a natural sample of the UK enterprise population in these segments.
About East & Partners
East and Partners is a leading specialist business banking market research and analysis firm. The firm’s core expertise is in the provision of analysis and advisory services tailored for the commercial, business and institutional banking markets across Asia Pacific, Australasia, Europe and North America.
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