Understanding Personal Guarantees in SME Borrowing

Introducing Our New Series: “Global Markets & FX” As part of our ongoing commitment to helping UK SME owners navigate the financial landscape with clarity and confidence, we’re launching a new type of blog post. Each week, we’ll deliver a concise, jargon-free summary of global economic events that may influence foreign exchange (FX) markets — and, by extension, your business. Whether you’re importing machinery from Germany, exporting craft gin to the US, or simply trying to manage your overseas supplier contracts, FX fluctuations matter. And understanding what’s driving those movements can give you a real edge. This Week in Brief The US Dollar remains strong amid confusion over President Trump’s looming reciprocal tariffs. The Pound is holding firm , but the UK Spring Statement on 26 March could shift sentiment quickly. The Euro retreats , as EU braces for the economic impact of a US-EU tariff clash. Let’s break it down and look at what’s driving the numbers — and what it could mean for your business. 🇺🇸 US: Trump’s Tariff Tensions Rattle the Fed The US Dollar Index remains above 104, showing sustained strength. But behind that steady number is a volatile political situation. President Trump’s proposed reciprocal tariffs — set for an announcement by 2 April — have markets guessing. Will it be a broad-based tariff hike? Or something more targeted? He hinted at “flexibility”, but few are reassured. The Federal Reserve, understandably, seems as baffled as the rest of us. Fed Chair Jerome Powell admitted: “It’s just… really hard to know how this is going to work out.” The Fed’s main concern? That trade tensions will fuel inflation while weakening growth — a nasty combination that’s difficult to manage with interest rate policy. They’ve cautioned that sudden shifts in market sentiment could spook global capital flows. What this means for SMEs: If you’re buying from US suppliers or have customers paying you in dollars, the strong USD could squeeze margins. On the flip side, UK exporters may become more competitive in the US market if sterling stays weaker. 🇬🇧 UK: Steady for Now — But the Spring Statement Looms Sterling has been surprisingly stable. GBP/USD is sitting around 1.2950, and GBP/EUR has moved back above 1.19. This is largely down to the Bank of England’s decision to hold interest rates — but not without some internal drama. Key takeaway? Catherine Mann has pivoted away from the dovish camp, suggesting that further rate hikes aren’t totally off the table. But, much like their US counterparts, BoE officials admit they’re unsure how US tariff policy will ripple through global trade and affect UK inflation and growth. The Real Test: Chancellor Reeves’ Spring Statement (26 March) UK public finances are on a knife edge. With borrowing costs rising, Reeves is likely to announce tough decisions — either cuts, taxes, or a blend of both. Most analysts expect tax rises later in the year unless there’s a surprise surge in UK growth. This week is also packed with UK data: Wednesday: CPI & RPI inflation figures Friday: Retail sales and GDP data What this means for SMEs: If you’re operating on thin margins, watch out. Rising interest costs or inflation-linked supplier pricing could force tough choices. Also, any hint of tax hikes could weigh on business confidence — or bring forward investment decisions. 🇪🇺 Europe: Tariff Talk Hits the Euro The Euro dropped back below $1.085 after a brief rally, thanks to comments from ECB President Christine Lagarde. The trigger? A 25% US tariff on EU goods could shave 0.3% off Eurozone growth in year one — and 0.5% if the EU retaliates. Her message was blunt: there would be a short-term hit to output, but inflationary effects wouldn’t last — meaning the ECB sees little reason to raise interest rates in response. ECB board member de Galhau even suggested they may cut rates further , underlining the different trajectory compared to the US. Key Data This Week: Eurozone PMIs: Watch for business confidence across France, Germany, and the broader region. Inflation: France and Spain will report this week. Germany’s IFO and unemployment data will offer further insight into Europe’s industrial powerhouse. What this means for SMEs: If you rely on imports from the EU — or sell into it — the falling Euro could impact your pricing models. It’s also worth keeping an eye on sentiment: lower confidence in Germany often sets the tone for wider EU demand. What Should UK Business Owners Do Now? FX movements often feel like background noise — until they hit your bottom line. With tariff uncertainty, differing interest rate paths, and political unpredictability, it’s more important than ever to build resilience. Here are a few simple ideas: Review your FX exposure – both incoming and outgoing payments. Talk to your accountant or adviser about whether forward contracts could protect your margins. Keep an eye on data drops (like CPI, GDP, and PMIs) to anticipate volatility. Self-Test: Is Your Business FX-Ready? Ask yourself the following: How much of my revenue or cost base is exposed to foreign currencies? If the GBP were to move 5% against the USD or EUR, how would that affect my margins? Do I have any contracts that lock me into specific exchange rates or payment schedules? Am I regularly reviewing FX risk with my finance team or adviser? Final Thoughts We’ll be back next week with another round-up. Think of this series as your Monday “heads-up” — a quick scan of what’s happening around the world, and how it might ripple through to your business here in the UK. If you’d like to speak to us about FX strategy, hedging options, or broader financial planning, we’re always here to help.