Feb62017

BCC International Trade Survey: Fall in Sterling expected to increase cost base and push up prices

British Chambers of Commerce
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The BCC today publishes the results of its International Trade Survey, looking at the impact of the depreciation in Sterling on businesses.

The recent fall in the value of Sterling is squeezing domestic sales margins, and increasing the cost base of UK businesses, according to the results of the British Chambers of Commerce’s (BCC) latest International Trade Survey. The findings, released today (Monday), also indicate that the weak pound is expected to push up the prices of products and services.

The results of the survey, run in partnership with moneycorp and based on the responses of nearly 1,500 surveyed businesses, indicate that the recent devaluation of Sterling is having a negative impact on the domestic sales margins of nearly half of businesses (44%). The effect is more diverse on export margins, with roughly equal levels of businesses reporting a positive (25%) and negative (22%) impact, suggesting that while the fall in value of the pound may be helping some UK exporters, it’s also hurting others.

The survey also found that 68% of businesses expect the fall in the value of Sterling to increase their cost base in the coming year. In turn, over half (54%) of companies expect to have to increase the prices of their products and services over the next 12 months.

Away from prices, the findings also show that nearly half of businesses (45%) do not currently manage currency risk. For those that do, invoicing in Sterling instead of their customer’s local foreign currency (32%) was the most popular means, followed by opening a foreign currency bank account to deal with sales and purchases in the same currency (16%), and waiting for an advantageous rate and buying using the spot market (14%). The same number of businesses (46%) don’t expect to manage their currency risk in the next six months.

Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said:

“The depreciation of Sterling in recent months has been the main tangible impact that firms have had to grapple with since the EU referendum vote.

“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.

“Our survey shows that inflation is going to be an important concern for businesses over the coming year. While inflation rates aren’t high by historical standards, they are still putting increasing pressure on companies. Rising costs are squeezing margins, and forcing many firms to increase the prices of their goods and services.

“Currency fluctuations aren’t something in the UK government’s direct control, and they are likely to continue as the Brexit transition unfolds. Ministers must do everything in their power, meantime, to help businesses keep costs down and stay competitive. Alleviating many of the up-front costs facing companies should be a priority for the Budget in March – starting with the sledgehammer of business rates.”

Lee McDarby, Managing Director of UK Corporate International Payments at moneycorp, said:

“The post referendum fall in sterling has clearly had an impact on many UK businesses and, as hedging begins to expire, importers and exporters will have to adapt to the new landscape. For exporters, the move potentially allows for greater competitiveness on an international level; however, importers may now have to think of new ways of protecting their businesses from further volatility.

“The timeframe for stepping away from the European Union is long, with at least two years of negotiation as and when Article 50 is triggered; this means that companies will have to be nimble and proactive when it comes to managing foreign exchange exposure.

“The key events of 2016 have certainly caused market uncertainty and there are no signs that this will subside in 2017. On that basis we are definitely engaging more with new and existing clients who are turning to FX specialists such as moneycorp for support and assistance when it comes to managing their currency risk.”

Ends

Notes to editors:

The British Chambers of Commerce surveyed 1,474 business people online between 1 December and 19 December. The survey sourced respondents from every region and nation of the UK. Around 95% of responding businesses were SMEs, and around one third were manufacturing, with the remaining two thirds operating in the service sector. A vast majority (80%) of responding businesses also sell products or services overseas.

The British Chambers of Commerce (BCC) sits at the heart of a powerful network of 52 Accredited Chambers of Commerce across the UK, representing thousands of businesses of all sizes and within all sectors. Our Global Business Network connects exporters with nearly 40 markets around the world. For more information, visit: www.britishchambers.org.uk

Media contacts:

Orla Hennessy – Press and Communications Officer

020 7654 5813 / 07825746812

Feb52017

Fire kills 18 at massage parlor in E. China

East Asia
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The photo taken on Feb 6, 2017, shows a foot massage parlor that catches fire on Feb 5 in Tiantai county, Zhejiang province. [Photo/Xinhua] 

At least 18 people have been killed and another two injured after a foot massage parlor caught fire in east China, local authorities said Sunday.

The fire broke out at around 5:26 p.m. Sunday in the Zuxintang Foot Massage Parlor in Tiantai County, Zhejiang Province, according to the county’s publicity department. The fire was extinguished at about 7:05 p.m..

Eight people were found dead in the fire, while another 10 died in hospital after medical efforts failed, according to the department.

Pictures on microblog Sina Weibo show a building engulfed by heavy smoke and people jumping out of windows, while firefighters were trying to tame the blaze.

An investigation into the accident is under way.

Feb52017

PLA drill features advanced missile

East Asia
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The People’s Liberation Army has released a video of a recent exercise employing the advanced DF-16 medium-range ballistic missile, a weapon seen as filling a gap in the nation’s arsenal.

Several launch vehicles carrying the ballistic missiles were seen in the footage that the PLA published on its video website, released to show the training of Rocket Force missile brigade soldiers around the Spring Festival holiday.

The participating units handled a number of scenarios, including chemical/biological contamination, countering satellite reconnaissance and electronic jamming. The crews practiced multiple maneuvers, such as rapid loading, redeployment and launch sequence, though the video showed no missile actually being launched.

Two types of DF-16 that appeared in the exercise are the bullet-shaped missile that is considered the original DF-16 and a new variant that features a maneuverable warhead and several extra fins.

The video represents the third time the DF-16 has been shown to the public. The missile made its debut at a military parade in Beijing in September 2015. In July, a television news program showed General Fan Changlong, a vice-chairman of the Central Military Commission, inspecting a DF-16 unit of the Southern Theater Command.

Though the PLA has never disclosed its ballistic missiles’ specifications, experts said the DF-16 poses a challenge to foreign military installations along the first island chain, which is what the Chinese military calls the series of islands that stretch from Japan in the north to China’s Taiwan and the Philippines to the south.

Xu Guangyu, a retired major general and now a strategy researcher, said that DF-16 has a strike range of more than 1,000 kilometers, filling the gap that previously existed with the absence of a medium-range ballistic missile in the PLA’s arsenal. He said the missile also is able to reach Okinawa, a Japanese island about 400 km from China’s Diaoyu Islands.

Shi Hong, executive editor of Shipborne Weapons, said the DF-16 was developed by China Aerospace Science and Industry Corp based on the DF-11 short-range ballistic missile and can carry a warhead of at least 500 kg. The missile has a strike accuracy as good as that of a cruise missile, Shi said. It is also able to maneuver in its final stage to penetrate enemy defensive firepower, he said.

Other PLA Rocket Force brigades also mobilized their DF-11, DF-15 and DF-21C ballistic missiles during training around Spring Festival, according to PLA media outlets.

In another development, Washington Free Beacon, a news website in the United States that specializes in military affairs, reported on Jan 31 that China conducted the first flight of the DF-5C intercontinental ballistic missile in January. The missile carries 10 multiple independently targetable re-entry vehicles. The DF-5C is the latest variant of the three-decade-old DF-5 family, the report said.

An unidentified officer from the Defense Ministry’s Information Bureau reached by Shenzhen TV on Saturday would neither confirm nor deny the DF-5C test, but said such tests are not aimed at any foreign nation or specific target.