There’s no denying that we are in the deepest recession for 70 years and British businesses have been heavily affected by the crisis across the channel. But what has been the real cost to UK businesses when it comes to the import and export of goods throughout Europe?
The largest impact that the debt crisis in the Eurozone has had is that of reversing the attitudes of the financial markets leading to a weak Euro, negative trading and a significant impact on UK importers and exporters. Obviously for those companies bringing products into the UK from the Eurozone, there are huge benefits as imports costs are at an all-time-low. The net result is that with the Euro at such a low value, these companies can use import letters of credit to expand their set-up and either reduce the price of their products (increasing competitiveness) or simply boost their margin of profit.
But there are two sides to every coin and UK exporters are looking very expensive right about now as the Euro buys you few pounds. In general British products are increasingly costly to European buyers and when you consider that over 50% of UK exports are bought by customers in Europe, you begin to see a worrying picture.
Simply put: 322 million Europeans in seventeen different nations use the Euro to buy their overseas goods, since the collapse in its worth, then haven’t been able to afford as many imports. Even worse, if Greece were to exit the Eurozone then UK exporters would instantly lose 2% of the European market with Greek policy focusing on domestic purchases over cash leaving the country.
Whatever happens in Greece or any of the other bail-out-dependent countries; the Euro debt crisis will continue to impact British importers and exporters, and the he crisis is far from over.