UK importers and exporters are experiencing challenging business conditions as a result of the recent plunge in the value of the pound.
The British Chambers of Commerce (BCC) has published its latest International Trade Survey, revealing that the fall in the value of sterling is squeezing domestic sales margins and increasing the cost base of UK businesses, with the prices of products and services expected to rise as a result.
Since the confirmation that Britain will be leaving the European Union, the pound's value has fallen to historic lows against many other leading currencies. The BCC's survey of 1,500 businesses showed that 44 per cent of firms are seeing this trend impact their domestic sales margins negatively.
Generally, a weaker currency is seen as a potential positive for export-driven companies, as it increases the relative value of their overseas revenues. However, the survey showed that while 25 per cent of UK firms have seen their export margins improve, 22 per cent have suffered a negative impact, suggesting the current trend is harming almost as many exporters as it is helping.
The report also showed that 68 per cent of businesses expect the fall in the value of sterling to increase their cost base in the coming year, with 54 per cent likely to charge more for their products and services as a result.
Dr Adam Marshall, BCC director general, said: "Our research shows that the falling pound has been a double-edged sword for many UK businesses. Nearly as many exporters say the low pound is damaging them as benefiting them.
"For firms that import, it's now more expensive, and companies may find themselves locked into contracts with suppliers and unable to be responsive to currency fluctuations."
Popular methods of managing currency risk include invoicing in sterling instead of a customer's local foreign currency, opening a foreign currency bank account to deal with sales, or waiting for an advantageous rate and buying using the spot market.