Brexit: Third of small businesses think pound will fall sharply when UK leaves EU in March

Thirty-four per cent of firms said they expected sterling to fall by more than 10%

More than a third of small- and medium-sized British companies think the pound is likely to fall sharply after the country leaves the EU in March next year, a survey showed on Tuesday.

Thirty-four percent of firms said they expected sterling to fall by more than 10 per cent, compared with 11 per cent who thought it would rise by the same amount, international payments company WorldFirst said.

Eighteen per cent of companies said they did not know how the pound would shift after Brexit and nearly two-thirds said they were not doing anything to prepare for a weaker pound.

Businesses were not asked to specify whether their prediction related to sterling’s value against the dollar, the euro or a wider range of currencies.

Roughly a third of the 1,083 small- and medium-sized enterprises (SMEs) surveyed by polling company YouGov traded internationally.

“There is a worrying disconnect between what the UK’s SMEs are thinking will happen to the pound and what they are actually doing,” Jeremy Thomson-Cook, chief economist at WorldFirst, said.

A poll of analysts published at the end of October suggested the pound is likely to rise to around $1.34 by late April – a month after Britain exits the European Union – from roughly $1.29 now, as long as Britain and the EU agree a divorce deal.

By contrast, the poll showed a weakening to $1.20 could be on the cards in the event of a no-deal Brexit.

Reuters