| e-business hopes £ continues to slide |
| Over the past two years, the value of sterling has risen considerably against other major currencies. As the chart shows, in April 1996, the pound was worth about 2.3 Deutsche Marks. One year later, it had appreciated to around DM 2.8. By the beginning of April 1998, the month covered by this issue of the e-survey, it had hit a peak of DM 3.1. The pound then began to fall and hit DM 3.0 by 1st May 1998, when questionnaires were despatched by e-mail. Since then the irregular fall has continued, with the pound reaching DM 2.9 at the time of writing. |
Source: PACIFIC Exchange Rate Service |
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Exports and Imports, April 1998 compared with April 1997 
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A strong pound means that goods exported from the UK are more expensive in terms of foreign currency, while imported goods are cheaper. In this e-survey, respondents (mostly owners and managing directors of small firms with internet web-sites, but including a few managers of very large firms) were asked how the strength of sterling has affected their business and, specifically, whether their exports and imports were up or down compared with one year ago. An earlier e-survey has already established that two-thirds of these firms are exporters. Although exports have held up surprisingly well in the face of the strong pound, this survey shows that a considerable proportion of UK firms are coming to rely more heavily on imported goods and materials, rather than those produced domestically. The chart (left) shows that 21 per cent of respondents said that, despite the strength of the pound, their exports as a proportion of their turnover were higher in April 1998 than in April 1997. Almost as many, 16 per cent, however, said that the proportion of their turnover which they exported was down. Only 5 per cent of respondents said that their imports as a proportion of turnover were down compared with a year ago. However, considerably more, 17 per cent said that their imports as a proportion of turnover had increased. |
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Although cheaper imports have benefited some firms, many have seen the other side of
the coin, with competition from abroad hitting their own sales:
"probably depressed sales from our UK customers". Many of the businesses taking part in this survey will hope that the pound's recent weakening continues, as they have been seriously damaged by its strength over the past year. Many of those which have maintained export volumes note that this has only achieved by cutting sterling prices and therefore profit margins. One respondent summed up the situation, noting wistfully, "I guess we should be importing and not trying to help export UK products and services". |
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The internet-connected firms taking part in this
e-survey have reported their weakest sales performance so far.
Some 51 per cent of the firms said that their sales were higher in April 1998 than in April 1997, but 21 per cent said that they were lower. The resulting balance (the proportion saying higher minus the proportion saying lower) of +30 per cent is the lowest since this survey began, in July 1997. |
"Was your sales turnover
in the month just ended higher, about the
same, or lower than in the same month last year?"
Note: Chart shows percentage balances (percentage saying higher minus percentage saying lower). Earlier surveys include late responses and so may differ from figures published elsewhere.
|
"Were your average selling prices
in the month just ended higher, about the
same, or lower than in the same month last year?"
Note: Chart shows percentage balances (percentage saying higher minus percentage saying lower). Earlier surveys include late responses and so may differ from figures published elsewhere.
|
Despite the poor sales performance, the balance of firms reporting increased prices was the highest so far. Some 43 per cent said that their prices were higher in April 1998 than April 1997 and only 10 per cent said that they were lower. The balance of +33 per cent compares with +28 per cent in the last survey. |
This tenth survey questionnaire was sent out on 1st May 1998 and by 13th May responses had been received from 63 businesses across the UK.
All individual replies will be kept strictly confidential. Only anonymised results will be published, and your e-mail address will not be passed on to any third party.
E-mail us with comments, queries or suggestions for future topical questions at: esurvey@mccannics.co.uk
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