Members of the UK200Group comment on news that markets worldwide have fallen sharply
Members of the UK200Group of independent accountancy and law firms have today commented on news that markets worldwide have fallen sharply following fears that China’s economy is slowing. The fall came after the Shanghai Composite dropped 8.5% yesterday on what the country’s official news agency, Xinhua, dubbed Black Monday. This shock led the FTSE 100 to record its tenth consecutive day of losses, falling 4.5% with around £74bn wiped off stocks.
Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell LLP, said: “The slowdown in the Chinese economy emphasises the benefit for UK SMEs of ensuring they have supply lines that are robust, particularly where they can have more than one supplier for a product or range, and perhaps a European or UK supplier as well as one from the Far East. For many, the import lead time and set up time in getting products to market from the Far East is material and any interruption in the supply chain that is not prepared for could be disastrous as competitors do take market space quickly. Stress test your business model and look at suppliers and the possible shocks you could have, in order to ensure longevity.
Jonathan Russell, Partner at UK200Group member firm ReesRussell, said: “The economic forecasters have been indicating the slowdown in China for some time and many have been worried about the stalling growth and how it might impact upon the UK. The UK economy is potentially more at risk than the average SME; government has long been bemoaning the fact that SME businesses have been, in their eyes, cautious about the overseas and export opportunities but this caution will to a degree protect the average SME. The slowdown in the world economy will potentially slow the world economy and in turn the UK economy. Because the Western economy is driven by consumption it will benefit because price pressures will again be downwards as China uses less in commodities and in turn that will ease pressure on any increase in interest rates. As SME businesses are able to react more quickly than big business, this change could create an opportunity.”
