Uncertainty

• •Uncertainty is when businesses are unable to predict external shocks or future events
• •A health scare is a widely reported story about the danger of something, usually a consumer good or medical product In 1988 Health Minister Edwina Currie said most of Britain’s eggs were infected with salmonella, as a result sales of eggs dropped
• Uncertainty and commodity price shocks- •Commodity means: a raw material or primary agricultural product that can be bought and sold, such as copper or coffee

  •If a business relies on commodities as raw materials then price shocks could mean a significant impact on profit
• Uncertainty and changes in exchange rates •UK exporters benefit from a fall in the value of sterling. However British firms importing raw materials, components or foreign-made goods face higher costs and must either put up their prices or reduce their profit margin

  •Key factors that influence exchange rates:

  •Economic uncertainty

  •Political stability and performance

  •Inflation

  •Interest rates
• Uncertainty and changes in interest rates

  •If interest rates go up then consumers are less likely to borrow for cars, houses, furniture, holidays etc

  .•If consumers stop spending and start to save then the economy may start to enter a recession
• Changes in legislation such as the GDPR