Even though the International Monetary Fund has stated that they believe sterling is overvalued, UK exporters cannot rely on it being revalued anytime soon.
Companies such as Rolls-Royce and Diageo have even reported drawing the short straw in currency exchange, resulting in unfavourable effects on profits.
“The Government’s target of £1 trillion exports by 2020 still seems out of reach,” says Carl Hasty, Director of international payments specialist Smart Currency Business. “However, the problem is not restricted to recent sterling strength.
“There are other factors at play. UK productivity is still not quite up to speed. While many companies recognise the benefits of exporting for business growth, there are many more that are unaware of this, unsure of how to proceed, or even uninterested in exporting.
“What we need is to step back and view the larger picture. Currency fluctuations are unpredictable, so businesses need strategies for mitigating risk. Once those are in place – and constantly being reassessed – businesses need to turn their attention to other aspects of exporting, such as streamlining production for better results, research and development, and considering new or alternative overseas markets.”
“Businesses need to ask themselves if the unfavourable effects of a strong sterling can be toughed out in the short term, and act as the trigger for process improvements and value-add developments for longer-term gains.”