Brexit: What Does It Mean for my Business?
So on the 23rd June, the unexpected happened and Britain voted to leave the EU. Despite the polls predicting that remain had the lead, leave eventually won out by a very close margin. But you already know this; the news has been plastered with fresh Brexit updates, opinions and dramatic speculation every day. What you want to know is ‘what happens now and what does this mean for my business?’
We’re Going to Try and Answer Those Questions
Britain’s exit from the EU has been confirmed, but it now needs to be officially confirmed within the EU. Until article 50 of the EU treaty is actually enacted (that’s the one about leaving the EU), Britain is still technically a member, and will not see any changes in policies or laws yet. New terms of agreement will be negotiated between Britain and the EU over the next two years, making the country’s exit a gradual thing.
During the week after the vote, the FTSE 100 (world share-market) suffered a loss of £1.5 trillion, which has since been regained. At one point the pound’s worth fell to the lowest it’s been since 1985, but it appears to be slowly improving. Yet with so many dips and rises, the world’s economy continues to remain uncertain.
These losses appear to have been a direct reaction to Britain’s decision to leave the EU; the event of such a significant investor leaving a trade market has caused mass uncertainty throughout Europe and the world. As every business knows, uncertainty is the greatest financial upset they can face, so the dramatic market reactions are unsurprising. Despite Britain having not even enacted article 50, the prospect of significant changes means economic instability all round.
These next two years are going to count for a lot; the decisions made by the British government and EU parliament will be laying the foundations for future UK business. The prospect of the EU imposing trading tariffs upon goods moving to and from Britain and the EU, is, to some, quite a scary one. If your business relies upon receiving otherwise expensive equipment or ingredients from the EU, you may be facing increased expenditure as a result of Brexit. Additional tariffs may be placed upon any products your company sells to the EU, meaning you could be forced to up your prices. In a recent survey, around 30% of small businesses felt they would need to up their prices in the face of Brexit, with 81% saying there would have to be a 10% price rise.
There are positive and negative sides to Britain’s EU independence; although British business may be facing tariffs, increased expenditure and taxes, they’ll also have much more freedom surrounding how they conduct business with the EU. Without all the current red-tape and bureaucracy of the EU, British businesses will have to spend less time navigating restrictive trading laws and signing documents. If you’re company feels tied down by the EU’s trading regulations, Brexit could be the opportunity to break free. Europe will want to continue to conduct business, with trade between Britain and the EU being valued at around £61 billion, so over the coming months new trade negotiations will be made to ensure that all parties involved continue to benefit.
During these post-Brexit negotiations, Britain’s small businesses will need to tide themselves over; think about what effect leaving the EU will have on your business. For example, banks such as HSBC are planning to move staff from London to Europe; will these changes affect your relationship with your bank? The Institute of Directors surveyed 1,000 companies, and found that around one quarter of them would need to freeze recruitment; will Brexit affect your ability to recruit new talent?
Leaving the EU also means that UK passports will need to undergo changes, and travelling across the EU may become more problematic. If your company does a lot of business abroad, how will this affect your ability to attend meetings and maintain international working relationships?
The best course of action may be to jump ahead of national negotiations, and start having some conversations with your EU partners. Reassuring them of your stability and your willingness to communicate will go a long way in ensuring continued positive relations. Research what tariffs may apply to your company when they’re announced; keeping your company and its contacts in the loop shows that you’ve got confidence and a plan.
The most dangerous factor of all this Brexit panic is fear and uncertainty; companies are afraid of losing stocks, of being devalued, of losing international partnerships and workers. The best response to this fear is to encourage everyone to remain calm: Mike Cherry, National Chairman for the Federation of Small Business stated that “smaller businesses up and down the country now need to focus on economic certainty and stability”.
Taking actions to deal with any problems threatened by Britain’s departure from the EU, and continuously reassuring staff and partners of your company’s ability to thrive, is the best response to Brexit.
So keep calm and carry on, Britain’s small businesses.