Now the GBP has sunk to almost the same value as the USD. Although I would’ve been initially thrilled by this, as I am now living in the UK but paying back my American student loan, so assuming that I am a wee bit miffed is an understatement (ah, well. At least we have great weather).

So, what does this mean for those of us in the UK? And most importantly, those with small businesses who are already suffering from the pandemic, what will happen to them?

Let's take a closer look

The value of any currency can be affected by a variety of factors, such as political uncertainty, economic conditions, and global market trends. In recent years, the impact of Brexit and the COVID-19 pandemic have not been kind to the GBP, which has led to increased insecurity and instability in the currency markets.

Here are 4 ways the fall of the British pound will affect small businesses.

1. Difficulty exporting: as if Brexit hadn’t done enough, a weaker pound also means that UK goods and services will be much more expensive for foreign buyers. This will directly impact small businesses who struggle to sell their products overseas, when other sellers will presumably be selling at a better price.
2. Higher costs of borrowing: the reduced value of the GBP will lead to higher interest rates, making it more expensive for small businesses to take out loans and invest in expansion. But steer clear of the loan sharks!
3. Increased costs of importation: just like with exporting, it will become increasingly expensive to import as well, leading to higher prices for customers and reduced income for businesses.
4. Unpredictability: much like driving through a blizzard, one cannot see more than a few feet ahead, making it impossible to plan your journey moving forward. Making long term plans and investments will be more of a stab in the dark, rather than a well thought out business plan.

As inflation continues to skyrocket and growing consistently higher than the wage growth, costs of goods and services are rising faster than people’s incomes. The other day at Waitrose I noticed that just a few months ago you could buy 3 packs of chicken for 10£, yet now the same chicken costs 8£ for 2 packs…not a gargantuan increase, but it won’t be very fun if it continues. 

For any young person living in a major city, anything other than sharing a 3 bedroom apartment with 9 other people seems to be out of the question for the time being.

What lies in store?

As for what will happen in 2023, as I mentioned back in point number 4, we are still in a precariously financial era, so who knows what the future holds in store. We are still recovering from the pandemic, and the decisions around Brexit appear to be making less progress than those looking for the identity of Jack the Ripper.

As the temperature drops, and the inflation rises, all we can hope to do for the time being is keep ourselves warm, fight the January blues, and hope that sooner or later the powers that be figure out what they’re doing.