The Brexit referendum in June 2016 was arguably one of the most significant events of recent times. With Britain now set to leave the EU in 2019, major economic consequences are predicted for the country, and businesses have been left wondering how their future trade will ultimately be affected. Here are some of the major issues they are facing.
The vote for Brexit itself has led to a period of immense uncertainty over the British economy, effecting everything from SMEs to credit cards. The news that it was going to be a reality sent the pound into freefall, with predictions that it may not recover for a significant period of time.
This uncertainty is always bad for businesses, at it stifles their ability to plan ahead and prepare for economic changes, which can prove fatal if it damages their trading capabilities. Unfortunately, no one can accurately predict the consequences of Brexit, especially since negotiations have only just started, so the exact terms are yet to be laid out and it could be some time before any useful details emerge.
Theresa May’s calling of a general election during this time of instability resulted in the Conservative Party losing its slim majority, weakening their negotiating position further. As a result, there is now uncertainty as to whether the current government, propped up by the DUP, will be able to effectively negotiate the terms of Brexit.
This adds more worries to businesses across the country, as it means that even the crucial negotiation process might be halted by political complications. Businesses are already having to survive in a tough environment, and there is no telling what the consequences of a politically divided country might be in the long run, greatening the difficulty of preparing for Brexit.
The government has set up a business council which will discuss Brexit and its effects on the economy, which will be chaired by Theresa May. Businesses have so far been critical of the lack of information which they have received from the government, given that Brexit will almost certainly affect their future.
The business council should help them to begin preparations by offering guidance as well as information on the possible outcomes of the negotiation process. The companies meeting with the council will be constantly changing to ensure different sectors are represented, and the information they glean may well trickle down to smaller businesses.
Deal With EU
Much of business preparation hinges on the type of deal which is reached and whether Britain retains access to the single market. With both the public and politicians alike divided over whether there should be a ‘hard’ or ‘soft’ Brexit, it seems as though reaching a deal with the EU will be extremely challenging, and topics such as the customs union, product standards and immigration will all be at the forefront of negotiations.
The global markets will no doubt have a major reaction once Britain eventually leaves the EU, and the value of stocks and shares in any given company could hang in the balance, affecting investors as well.
The deal which will eventually be reached will give the best indication of the direction Britain is headed, so businesses across the nation face a nervous wait. As of yet, it is very hard for them to accurately predict the effects of Brexit, but as negotiations continue, a clearer picture of Britain outside the EU will emerge.