What Brexit Might Mean For Business
Posted on Jul 12, 2016
Brexit is likely to have a big impact on startups, technology, telecoms and privacy.
Last month, the citizens of the United Kingdom (UK) have voted to leave the European Union (EU). But what does Brexit really mean for business? Right now, the short answer is: no one knows. The truth is this turn of events is completely unknown and unprecedented. Ever since the EU was formed between 1951 and 1958, no other country has ever elected to leave.
The negotiations between the UK and the EU will determine the next steps for many industries. This includes national and international businesses with offices in the UK. Following this uncertainty, it’s crucial to stay informed. Here’s just a few possible scenarios and their implications - of course, everything at this stage is supposition. Overall though what we keep hearing is that businesses have to move on, adapt or die...
London is not only the financial centre but also a hub of global businesses and SMEs. According to an article wrote by Financial Times, a study by City UK “found in a poll that 84 per cent of members were in favour of remaining in the EU, while only 5 per cent backed a British exit.” Their members are mainly big employers in the banking, insurance and asset management industries but supported by thousands of smaller service based companies who both feed from and contribute to the overall economy.
The City is quite international and the Leave vote might change this significantly. HSBC has said they might consider moving up to 1,000 jobs to Paris, JPMorgan announced they could cut up to 4,000 UK posts and London tech start up DueDil plans to open offices outside the UK.
While some private, big international companies fear the uncertainty brought about as a result of "Brexit", smaller companies might find it good to be released from the bureaucracy of certain EU legislations.
Many leaders of UK businesses might have some justifiable concerns at the moment, given the unprecedented nature of events. The vote to leave the EU is to be followed (we understand) by a period of negotiation of terms and followed by the establishment of new trading relationships.
Staying part of EU’s Single Market will still be part of such negotiations. Whilst last week, Van Rompuy, who led the European council during five years of economic crisis, told the Guardian that these negotiations wouldn’t be easy. “I cannot imagine special treatment for Britain if they want access to our market of goods and services.”
The UK could adopt existing models from post-exit settlements, like Norway and Switzerland. Although Norway has access to the Single Market, they still have to adopt every EU law and confirm to the standard set out in Brussels and Strasbourg. Alternatively, the UK could follow the US model, giving access to the global market but providing no exclusive privileges.
The International Market
Just three weeks ago, a majority of UK citizens voted to leave the world’s largest economic group. In just three weeks, the world has already started to feel the legal and financial implications of this decision.
The International Monetary Fund has urged the UK to make the withdrawal soon in order to reduce economic uncertainty. As reported by The Daily Telegraph, the head of the International Monetary Fund, Christine Lagarde said “the Brexit vote was already having an impact on global growth, and had affected the IMF’s world economic forecasts.”
What Should You Do?
Do not panic!
The worst thing for your business and financial growth at the moment is to panic. As we mentioned before, no one really knows what the future holds for the UK. It is paramount to keep your business steady, keep your plans in place and do not do many rushed changes.
There will be a period of time when the UK can negotiate future relationships with the EU. This process is regulated by law, governed by Article 50 of the Lisbon Treaty. Keep calm, Carry on (with the day to day activity)! Keep your boat steady, use this time to stay informed on the negotiations in place between the UK and EU and consider what alternative strategies and contingency options your organisation may require.
Reassure your employees
Employees may be, like the man in the street, feeling anxious with the implications of Brexit, and not just those working in the UK but originally hailing from other EU countries. Your people matter. You matter to them. Reassure them throughout the whole period. The likelihood is that Brexit will have minimal change on their status, nor those of the thousands of UK expatriates working abroad (there are more Brits working overseas than any other EU member country).
Westminster Search, a recruitment company, conducted a post-Brexit survey of public affairs and public policy professionals. The results showed that 19.80% of respondents considered that Brexit would be mildly to highly positive for the UK economy and 67.71% of respondents believed Brexit would be mildly to very negative. In terms of business impacts, 20.84% of respondents think Brexit could have a mildly or highly positive effect on their organisation and 48.96% saying it might have mildly or highly negative effects. Only 10.42% of respondents are going to reduce staffing levels.
Plan for different scenarios
Expect newspapers and researchers to do in-depth analysis and forecasts throughout the negotiation period. They will be reviewing the impact of decisions, different exchange rates and possible changes to trade relationships in the international market.
*Source: What Brexit means for business, QBE Europe.comments powered by Disqus
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