UK firms must prepare for eurozone crisis, say accountants

A leading accountancy organisation has warned that the majority of UK businesses have no contingency plans in place in response to the economic turmoil in the eurozone.

The Institute of Chartered Accountants in England and Wales (ICAEW) conducted a survey of more than 500 of its members working in senior finance roles in commercial businesses.

Its findings, published on 15 May, revealed that of those businesses that deal with eurozone countries and feel that sovereign debt would impact negatively on their operations, 52 per cent had taken no steps to prepare for the eurozone challenge.

Of those that did have contingency plans in place to limit the negative impact of the eurozone crisis, the most popular steps being taken were:

  • building cash reserves (23 per cent)
  • converting cash reserves back from euros to £ or $ (19 per cent)
  • reducing number of staff (15 per cent)
  • having a strategy for exiting from the eurozone countries (11 per cent)
  • selling assets in the eurozone countries (11 per cent).

Michael Izza, ICAEW Chief Executive, said: “Historically, Europe has been the UK’s main overseas market and it is likely to remain the main export market for UK businesses for the foreseeable future.

“That said, it’s important that businesses watch how the present situation unfolds and take appropriate action to mitigate the impact of economic difficulties in eurozone countries. This applies as much to businesses in the UK as it does to those in the eurozone.”

Link: The ICAEW report