In June 2016, the UK voted in a referendum to leave the European Union, an activity that is otherwise known as “Brexit”. Since that time there has been a good deal of uncertainty about what that means for UK businesses. This is because the terms of the exit are still under negotiation, and in fact, any discussion of a trade deal between the UK and the EU to date has to date been minimal. However, some impacts have already been felt, and are continuing to be experienced. Some of the impacts of Brexit currently for UK businesses are as follows:

  1. Suppliers being sought from within the UK – one of the ongoing impacts of Brexit in the UK has been a much weaker pound since June 2016. In the manufacturing sector this has had a positive impact for some businesses. This is because British businesses that had been sourcing components and supplies abroad are now in some cases revisiting suppliers in the UK. This is because UK suppliers may be cheaper than overseas options in some cases. This has provided a much needed boost to some manufacturing businesses that supply components. For the same reason, companies that sell their products overseas have in some cases experienced a boost to their revenues.
  2. Economic uncertainty affecting consumer behaviour – there is evidence to suggest that the uncertainty about Brexit is starting to influence consumer behaviour, leading to consumers being more conservative about purchasing decisions. As explained by the New York Times, inflation has been increasing, but at the same time, salaries have not been rising to match these higher prices. Faced with higher costs, and wages that are effectively lower, British people are having to think more carefully about how they spend. This is impacting on the sales of UK goods in some cases – though as above, in other situations, UK goods may now be more cost effective than imported products.
  3. A loss of employees and a shrinking of the labour pool – many UK businesses are reliant on a good proportion of EU citizens working for them, and especially in lower paid roles that are less attractive to UK workers. As highlighted in The Independent, the uncertainty regarding plans for EU citizens has led to many leaving already for jobs elsewhere in the European Union. This has been found to have had an impact on the construction industry in particular, though companies in other sectors are also affected, such as in food manufacturing and farming. Businesses are worried that they will simply not be able to fill jobs, and that they will be left uncompetitive.
  4. More visitors to the UK – the Brexit vote and the consequent slump in the pound led initially to an increased number of international visitors to the UK, and this was very beneficial for many companies, not least those operating in the tourism sector. However, the most recent reports show that tourism spending was starting to see much smaller annual increases, and that spending from North American and European visitors was lowering.

 

Overall, currently Brexit is bringing benefits for some businesses, and drawbacks for others. There are concerns that some of the benefits may be short lived, such as that with tourism. The situation is likely to continue to change as the year progresses and as some of the areas of uncertainty become clearer. In the meantime, it is business as usual.