IMPACT OF EUROZONE CRISIS ON UK BUSINESSES

Impact of Eurozone Crisis on UK Businesses

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Impact of Eurozone Crisis on UK Businesses

Introduction

Eurozone crisis undoubtedly has a negative impact on UK businesses. A eurozone crisi worsening is likely to have a depressing impact pulling out ahead of those with direct business association with the eurozone.

Discussion

Eurozone crisis is unsurprising impact larger companies in comparison to their counterpart in SMEs (Small Medium size Enterprises) to have many channels by which they get in touch with eurozone, in the form of debt finance or outsourcing with eurozone-based banks, business functions, suppliers and customers (Minford, 2008, pp.283-295). The direct exposure impact to the eurozone is auxiliary seen when seeming at the turnover proportion that comes from eurozone's customers; such as more than 6 percent turnover curtailing from these customers are more probable to be negative (Lacina & Rusek, 2012, pp.63-73).

Consequently, eurozone crisis leads UK businesses to high level of uncertainty, which as a result, made the eurozone customers reluctance to spend if they do not have to that eventually restricts the growth. However, there are a large number of customers present in the eurozone and in case the economy goes through crisis, there is a significant drop in sales, which without any doubt leads to enormous decrease in turnover because of customers' reluctance to spend due to no or less confidence in the market (Hodson, 2011, pp.231-249).

The impact of eurozone crisis is not just limited to those with direct exposure to the eurozone (Sleight, 2012, p.15). Both larger businesses and SMEs, with no direct contact with the eurozone, expect that a deteriorating of the situation of eurozone may possibly have a depressing impact on businesses. This is mainly because of the expected unplanned effect that such a crisis can occur ...