The President of the Engineering Industries Association, Sir Ronald Halstead, has asked again for our help with a survey. He will be attending a meeting of the Genesis Panel at the Bank of England in March to discuss the prospects for SME's in the light of the current economic and financial situation.
Since our last survey the Prime Minister has clarified the UK negotiating position with respect to Brexit. Ultimately we could leave the EU and rely on World Trade Organisation rules for our trade with the EU. Although the exit from the EU is still a few years away there are certain trends already taking place in the UK economy:
- £sterling is weakening against the €euro and US$ making exports cheaper and imports more expensive.
- The chancellor has abandoned the objective of closing the budget deficit by 2020 but still wants a progressive reduction to continue
- The Bank of England wants to maintain financial liquidity in the UK and the availability of credit to finance investment and exports. The Government have set up the British Business Bank (BBB) to fund the alternative lending market. The BBB have also formed URICA, a joint venture with RSA, to help the cash flow of SMEs. The EIA have established a partnership with URICA to help the cash flow for SMEs in engineering.
Costs will rise because of £sterling depreciation.
Is the imposition of the living wage likely to be a problem for SMEs?
Is Brexit and these other factors affecting our business confidence?
Your comments would be appreciated.