European Debt Crisis Hits UK International Trade
The Travelex Confidence Index (TCI) dropped by 2 points to 109 in June, affected by inflation concerns and weak economic conditions. British importers’ and exporters’ confidence has retreated in the UK economy, trading overseas and the prospects of future growth, according to a survey released by Travelex Global Business Payments (TGBP). The TCI, a measure of UK trade confidence, dipped two points in June, as the unfolding Greek crisis and UK inflation fears damaged business confidence.
Nearly a third of UK small and medium-sized enterprises (SMEs) trading internationally (31%) said that the UK economic situation has worsened over the last six months, up 35% since May (23%). Deteriorating conditions in the eurozone also impacted confidence in future trading conditions, as there was a 12% drop in the number of businesses confident that trade conditions will improve over the next 12 months (May 68%, June 60%).
According to the report, many SMEs highlighted inflation as a major source of concern. Seventy per cent of exporters are alarmed that further increases in inflation will negatively impact their competitiveness abroad and adversely affect their business. This is up 11% since May (63%).