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This blog was first written in July 2016, and was updated September 2016.
It’s was pretty quiet in the first month after we all woke up to the news that the UK had voted to leave the EU. The time went by fairly quick and who could have expected that quite so much would happen as a result; a new Prime Minister and Cabinet, political parties falling apart, and uncertainty in the financial markets. However, do we really know what is going to happen? .
Theresa May, our new PM, has been fairly clear with Angela Merkel and other EU leaders that Article 50 will not be triggered this year. As a result, negotiations may in the early planning stages but we’re not going to hear much before September on the bigger questions of legislative change and trade deals.
However, some noises have been made; the Australians have offered trade deals, and there have been announcements from the Bank of England to keep the money flowing. There have also been some positive outcomes in the world of Aerospace and Electronics with investments and orders secured for the mid to long term.
On the flip side, valuations of the US Dollar and Sterling have some City Analysts suggesting we are approaching a period of recession (see here), and Lou Jiwei, Chinas Finance Minister gave our new Chancellor a fairly stark response saying that Brexit would 'cast a shadow over the global economy'. Maybe not in direct response, but Philip Hammond announced that the UK Economic Policy could be reset, although what that means is unclear (See here). In my opinion, China are hardly going to look positively at the UK’s trading position until we have sorted it out with our nearest neighbours.
The impact on UK business has been mixed. Some organisations buying from the EU have suffered immediate price hikes which may or may not be justified, although these are sector specific and evidence is limited to prove this as a general trend.
The biggest risk through July and August seemed to be talking ourselves into recession. Certainly, business activity slowed and decisions were put on hold for smaller business although whether that was due to the Brexit vote, or simply because of the Summer Holiday period was unclear. What is clear though,even as we move into September is that Businesses affected by the prospect of Brexit are getting on with the planning. Strategies are mixed; some organisations are setting up trading entities in Europe, or staffing up European offices to deal directly with suppliers and customers. Some simply are trading more in Euros. How effective any strategy will be is difficult to tell.
Brexit is likely to have a major impact on all our organisations, with both risks and opportunities. To ensure that we at Spedan are at the front of the pack, we've got the likely risks listed as part of our Risk Assessment, and we will assess the potential Opportunities continuously. It's a point of discussion and if you want to share your experiences, we'd love to hear from you.