The unexpected Brexit vote has put a question mark on Britain’s economic future – despite the economic success of its past. The country had recovered well from the 2008 financial crisis and was one of the fast growing advanced economies in the world in 2015. In fact, the fifth largest economy in the world by GDP – until the result was declared last Friday. By the time the exchange rate had somewhat stabilised, the country had lost 5th place to France.
And now uncertainty has gripped the country, business and economy. There is some evidence of deeper effects already taking place – apart from the obvious ones such as stock markets and exchange rate falls. This evidence includes:
Small and micro-business: “10% price rise from supplier of traditional toys notified to us @playmerrily due to economic instability post-Brexit :(” Merry Raymond @MerrilyMe
Bigger business: Easyjet are looking to get a European air operator certificate:
Investment in the UK is reported to be on hold: Siemens no longer plans to export wind turbines produced in Hull and Singapore’s United Overseas Bank put a stop on London commercial property deals.
Since the UK is effectively without political leadership at present, certainty appears to be many months or even years away. So how do UK businesses cope with the situation now in place after the Brexit vote?
Here are a few ideas from me:
- If your company is already working in the EU, maintain and increase trust by contacting your business partners. Now is the time to reassure everybody that you are working hard to understand the implications and will do everything in your power to minimise the consequences for business relationships.
- Review your budgets and plans. Take a long hard look at what you have planned to do and take the best decision you can on what is still achievable. Identify obvious issues and start taking decisions on how to mitigate the risks that are likely to arise.
- Since the exchange rate has fallen, look at the opportunities and threats that arise from this. Although you may already be experiencing rising prices for raw materials, goods and services that you purchase from other countries, it is worth noting that the goods and services that you offer are now cheaper for those in other countries. British brands and values are highly valued both in Europe and far beyond so despite the uncertainty you may find willing buyers – especially if they benefit from the exchange rate.
- Manufacturing costs – after reviewing your manufacturing cost structure, are there opportunities from changing your sourcing countries? E.g. can you support the British economy by moving manufacturing back on-shore due to the new exchange rate situation? Would lower production costs from UK manufacturing enable you to offer a more attractive product/service in other countries?
- Look at setting up bank accounts and/or business entities in a Eurozone country. Places known for their ease of doing business include Ireland, Benelux, Germany and Scandinavia. You may be surprised to know that Latvia and Lithuania rank higher on the list than France, Italy and Spain.
If you have never considered selling in other countries but are now looking for international opportunities, please contact us for advice.