Retailers face higher import costs after EU referendum
Retailers face higher import costs after the pound dropped after a divided Britain voted to leave the EU.
The pound dropped to its lowest rate since 1985 of $1.33, before recovering to $1.377, a fall of 7.35%.
In March DFS said every 1c change in the £/$ rate could cost it or make it £500,000.
The FTSE 100 share index dropped by more than 8% before recovering after the Bank of England said it would make £250bn available to stabilise markets. At the time of writing the index was down 4.19% with house builders particularly hit: Taylor Wimpey was down 22%.
‘A few months ago, the Bank judged that the risks around the referendum were the most significant, near-term domestic risks to financial stability. To mitigate them, the Bank of England has put in place extensive contingency plans. These begin with ensuring that the core of our financial system is well-capitalised, liquid and strong,’ said Mark Carney, Bank of England governor.
‘This resilience is backed up by the Bank of England’s liquidity facilities in sterling and foreign currencies. All these resources will support orderly market functioning in the face of any short-term volatility.
‘The Bank will continue to consult and cooperate with all relevant domestic and international authorities to ensure that the UK financial system can absorb any stresses and can concentrate on serving the real economy.
‘That economy will adjust to new trading relationships that will be put in place over time. It is these public and private decisions that will determine the UK’s long-term economic prospects.
The best contribution of the Bank of England to this process is to continue to pursue relentlessly our responsibilities for monetary and financial stability.
‘These are unchanged. We have taken all the necessary steps to prepare for today’s events. In the future we will not hesitate to take any additional measures required to meet our responsibilities as the United Kingdom moves forward.’