UK Businesses Should Be Careful When Trading with the Eurozone in 2015

Ernst & Young (EY)’s annual Eurozone Economic Growth Forecast predicts that Lithuania will be the fastest-growing economy within the single-currency bloc in 2015. The country, which enters the Eurozone on 1st January 2015, is expected to expand by 4.5% and outstrip Latvia as the bloc’s fastest-growing economy.

“Although Lithuania is projected to contribute to Eurozone growth in 2015, the area still has some distance to go before achieving economic stability,” says Carl Hasty, Director of international payment specialist SmartCurrencyBusiness.com.

“Besides struggling with inflation levels falling perilously close to deflation and high levels of unemployment, the European Central Bank is under immense pressure to commence a robust quantitative easing (QE) programme in January.

“QE should theoretically improve investor sentiment in the outlook for Eurozone economic performance, but undermine that of the euro. However, predictions for the Eurozone can be unwieldy, as market volatility is intensified given how the region’s individual states differ in terms of economic performance and outlook.

“UK businesses currently or considering trading in Lithuania should proceed cautiously.

“UK businesses with euro requirements will need to be careful about currency market fluctuations in 2015, especially given the uncertainty over QE. They should have robust currency strategies in place in order to minimise losses and mitigate risk on currency exchanges.”

 

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