The British Chambers of Commerce said Monday that the pound's decline since the country voted to leave the European Union in June is increasing costs and tightening margins for domestic companies.
Nearly half of the 1,500 firms surveyed in the BCC poll said that the fall in the pound is having a negative impact of domestic sales margins, while 25% said it was having a positive impact on export margins. A smaller group, 22%, said there has been a negative impact on export margins since the vote to leave.
"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," said BCC Director General Adam Marshall. "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."
The pound has fallen nearly 18% against the U.S. dollar since the Brexit vote and traded around $1.2453 at 08:30 GMT.
The majority of respondents, 68%, said the devaluation of the currency will increase their cost base in the coming year, and in turn, 54% said they will increase prices in response.
Inflation is beginning to take hold in the U.K. In December, inflation hit 1.6%, according to figures from Britain's Office for National Statistics, up from 1.2% in the previous month. It was the fastest increase in more than two and a half years.
"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," Marshall said.
