2025 EU Elections: How Political Shifts Are Reshaping GBP/EUR Volatility (And 3 Tactics to Protect Your Business)
Post Election Currency Risks in the EU and UK
The 2024 EU Parliament elections have intensified currency volatility, with GBP/EUR fluctuations impacting businesses reliant on cross-border trade.
As of 2025, the EU remains the largest factoring market globally, with €2.44 trillion in turnover across European countries in 2023, representing 12.3% of Europe’s GDP.
For UK businesses, post-Brexit challenges persist, with goods exports to the EU still 18% below pre-2019 levels.
This volatility underscores the urgency for SMEs to adopt robust FX strategies.
Struggling to forecast FX costs? Let InspireMatch connect you with experts
Factoring Market Growth
The global factoring market is projected to grow at an 11.5% CAGR from 3.46 trillion in 2025 to 3.46 trillion in 2025 and to 5.35 trillion by 2029, driven by SMEs needing liquidity solutions.
Europe dominates the market, with France, Germany, and the UK accounting for 45% of EU factoring turnover in 2023 (France: €426.6B, Germany: €384.4B, UK: €363.2B)
Foreign Exchange Trends
The global FX market is forecasted to grow at a 7.2% CAGR, reaching $1.1 trillion by 2029, fueled by geopolitical risks and cross-border transactions.
AI-driven FX platforms, such as Revolut Business, have reduced trade execution times by 90% for UK clients, directly addressing GBP/EUR volatility
Impact of EU Elections
The EU’s revised Late Payment Regulation (2025) aims to protect SMEs, but stricter compliance could strain cash flow for businesses reliant on cross-border trade.
Geopolitical tensions, including proposed EU tariffs on UK goods, are exacerbating currency risks, particularly for manufacturing and automotive sectors
Don't let volatility erode margins. Let us find you an expert for a no obligation quote.
Three Data-Backed Tactics To Mitigate FX Risks
1. Dynamic Hedging for High-Risk Transactions
Why It Works: Locking in rates shields businesses from sudden currency swings. For example, a €1M invoice hedged at 1.10 GBP/EUR could save £50,000 if rates drop to 1.05.
Adoption Rates: 73% of EU importers now use hedging tools, up from 52% in 2023
2. Diversify with Multi-Currency Accounts
Regional Trends: 55% of EU businesses hold GBP, EUR, and USD accounts to balance risk. The UK’s fintech sector grew by 22% in 2023, driven by £4.6B in AI and blockchain investments.
Case Study: A UK retailer reduced FX losses by 30% by splitting payments across EUR and USD during GBP downturns.
3. AI-Driven FX Monitoring
Cost Savings: SMEs using AI tools save 12–18% on transaction costs through predictive analytics.
Adoption Gap: Only 45% of UK SMEs use automation vs. 68% in the EU, highlighting untapped potential.
Example: The Reserve Bank of India’s TReDS platform (2022) streamlined invoice discounting for MSMEs, a model applicable to UK-EU trade
Regulatory Shifts to Watch
EU Green Finance: Stricter ESG regulations (e.g., EU’s CSRD) are pushing businesses toward sustainable supply chains, which could impact FX strategies for carbon-intensive sectors.
Cross-Border Factoring: The global factoring market’s 8.5% CAGR (2025–2029) reflects rising demand for liquidity in cross-border trade, particularly in Asia-Pacific
Conclusion: Leverage Data to navigate Uncertainty
The EU’s political and economic shifts demand actionable insights:
-
Prioritize dynamic hedging to lock in favorable rates.
-
Use multi-currency accounts to mitigate GBP/EUR swings.
-
Adopt AI tools for real-time FX monitoring.
Let's get started.
Fill out the form below for a no obligation quote