Generally, the improvement in the strength of sterling was viewed with some relief in my office, but only for fairly selfish reasons. The vast majority of our range is British or Irish, but at Christmas we import more product from Italy, Spain, Germany and other European countries. Last year we were, of course, badly stung by the drop in exchange rates after Brexit, our Christmas catalogue already being published by then. We were left with two choices, either pass on the increases to our customers, or take the hit ourselves! We did the latter. So any small gain in margin this year will see some of the loss returned!
The improvement last week was due to noises from the Bank of England moving interest rates up before the end of the year, due to inflation being well over the target of 2%. Now, I am no economist, but I understand that the mechanism of raising interest rates to curb economy is to stop runaway and uncontrollable growth in our economy. However, this is not what is happening here. Inflation is high, not because of a rapidly growing economy, but because many manufacturers have experienced large increases in ingredients or components bought from outside the UK, due to the reasons mentioned above. The trouble is that fluctuations in exchange rates are generally temporary and will revert back causing no long-term benefit to manufacturers in the UK. What needs to happen urgently (and won’t) is some clarity on the Brexit process, which is badly damaging businesses in all sectors at present.
On a more positive note, I have been privileged to judge the Speciality Food Magazine’s New Producer Awards this week in the Sustainability category. The quality of the short-listed entries is phenomenal and it is very difficult deciding the winner. Just very encouraging to know how many businesses in the UK are thinking of benefitting suppliers, staff and the environment in the way they do business. Business can, indeed, change the world for better!