As predicted, the “In” campaign is going heavy on the fear factor to try to convince people that a vote to leave the European Union would be a “step in the dark” and could cause Britain a decade of economic uncertainty. They claim chaos could ensue should we decide we’ve had enough of the EU. This is debatable, and certainly no certainty.
But, could the mere fact that we’re having a referendum at all be enough to cause our economy, and the UK window and door industry problems? It’s possible?
The Boris effect
The markets are definitely nervous.
It took a while for Boris Johnson to decide which camp to join. Eventually, he joined the “leave” campaign. Look at what happened to the value of Sterling when he did:
Now, Sterling was on a bit of a slide before he announced it. It was on the slide as the Prime Minister’s negotiations were taking place. However, a prominent figure like the Mayor of London has influence in matters such as these, and if a figure like Boris says one thing or another, the markets listen and they react. They didn’t much like his decision.
Why Sterling matters
The Pound has taken a hammering in recent days, and there are various reports out now predicting it will only fall further. If you’re headed to the US in the coming weeks and looking to sort your spending money out, these rates don’t look great.
What is worse however, and does directly affect the window and door industry, is that the cost to import goods, such as window and door hardware. Check out this tweet from Darren Waters, CEO of ERA:
@glazingblogger it already is - the continued fall in the value of £ is driving up the cost of imported hardware. Price rises inevitable.— Darren Waters (@DarrenWatersERA) February 29, 2016
Darren believes that even this initial dip in the price of Sterling is going to cause price increases. With reports in the financial world predicting the Pound to drop to £1.25 versus the $, those price increases are only going to continue. And they will be passed on.
Another sting in that tail is we can also expect fuel prices to creep back up, even if they do remain at thirty-odd dollars per barrel. The better the exchange rate versus the dollar, the cheaper we can import oil, the cheaper it is for us at the pumps. The reverse of that is also true.
All of this is happening right now, well before a vote has even been cast. Will this have an effect on consumer behaviour? Will the window and door industry see a slow down up to polling day? Time will tell. Some say yes, some say no.
Can you imagine what will happen if we voted to leave?