News in brief: EU, Brexit, currency, FX, Scotland, Mozambique

News in brief
News in brief

EU referendum politics and currency fluctuations rock the boat for exporters

The pound has reportedly hit its lowest level against the dollar in nearly seven years, following London Mayor Boris Johnson’s announcement he is supporting the leave campaign in the upcoming Brexit referendum.

According to the BBC, as one stage the pound hit its lowest level since March 2009 before later bouncing back slightly.

Commenting on what the EU referendum means for UK businesses trading internationally, World First chief economist Jeremy Cook said: “Alongside wall to wall coverage of both campaigns, we expect the coming weeks and months to add further volatility and pressure onto the pound – something that won’t be lost on the UK’s importers and exporters.”

Cook explains that the Scottish referendum and the 2015 General Election proved just how much of an effect political risk can have on the pound. He warns that, should the UK populace vote to leave the EU, these losses will seem minor as the pound will likely plunge further.

Cook continues: “The uncertainty over the coming months will now place great pressure on businesses, especially SMEs who are exporters and importers as their balance sheets have far less ability to absorb major currency swings compared to their larger counterparts. Given that effective management of currency risk is imperative for a business’ success, regardless of the outcome of the referendum, the next few months could prove a pivotal point for the UK’s SMEs.”

Drive to protect Scotch whisky in Mozambique

The Scottish Secretary David Mundell has held talks with Mozambique’s Minister of Industry and Commerce Ernesto Tonela as part of his drive to promote Scottish exports in the state.

Mr Mundell lobbied Mr Tonela to grant Scotch whisky geographic indication status to help producers market its premium status and be protected from imitations.

Imports of whisky to Mozambique have risen dramatically in recent years and the Scotch Whisky Association believe it, along with many other parts of Africa, are a potentially valuable export market.

Mr Mundell said: “Whisky is one of Scotland’s greatest success stories and it is important that our exporters get all the support they deserve.

Our firms adhere to the highest standards and make a product which is recognised the world over. They should be protected from imitators, and consumers in Mozambique and elsewhere should be able to have confidence that what they are drinking is the real thing.”

Scotch Whisky Association chief executive David Frost said: “It is great to see that Scotch Whisky is in such demand in Mozambique and we expect its popularity to increase as the country’s economy grows. We have the same positive outlook for many African countries with a growing-middle class seeking out high-quality imported products such as Scotch.”