â¢ British Exports will suffer following an interest rate rise, warns Travelex Global Business Payments
â¢ Poll of 1000 shows June as most likely month for a rate hike
â¢ Poll also reveals that Aston Martin is Britainâs favourite export
Research conducted by Travelex Global Business Payments shows that most UK consumers expect a rate hike in June (15%), whilst 8% believe that the Bank of England will raise rates as early as next month. However, whilst a rise in interest rates might stabilise record-high inflation levels, Travelex Global Business Payments have said a rate hike could have a negative impact on British exporters, if the pound strengthens following the hike.
An increase in the rate of borrowing will make UK exporters less competitive in the international marketplace and impact economic growth prospects.
David Sear, Global Managing Director at Travelex Global Business Payments comments, âAlthough George Osborne does not control interest rates, he must be aware that the Bank of England are caught in a real dilemma. They need to raise rates to combat inflation, but a rate hike will be difficult when the spending cuts start to bite.â
The business payments specialist said that small and medium sized exporters are likely to be affected by the rate hike, as currency fluctuation impacts their bottom line profitability. Sear comments, âGeorge Osborne is relying on British exporters to drive the economy forward, but a rate hike will only strengthen the pound and make our exports uncompetitive overseas. Exporters should perhaps look into currency management tools like forward contracts, that help to mitigate the risks involved in currency fluctuations.â
Following George Osborneâs call to arms that âBritain is open for business,â Travelex Global Business Payments surveyed more than 1000 consumers to find their favourite British export. More than one in four (26%) said that they are most proud of Aston Martin.
Three of the top six most popular British export brands were car manufacturers, with Rolls Royce (20%) and Bentley (11%) in third and sixth place respectively. In second place was Cadbury (23%), with Heinz (11%), and Marmite (9%) close behind. Less dear to the British consumers heart was department store Harrods (7%) and clothing brand Burberry (4%).