On June 23rd 2016, The United Kingdom voted to leave the European Union. Many UK business have trade deals with countries within the EU, and also trade deals with countries outside of the EU that have been negotiated alongside other EU countries. The freedom of movement that is part of being a member of the EU’s single market means that goods and people can freely travel around countries in the EU, and businesses rely on this to transport their products across Europe. This is all set to change when the UK leaves the EU, and it brings much uncertainty for business in the UK.
Those who campaigned for Brexit are optimistic about the future for business, claiming the UK will now be free to make trade deals with countries all over the world and won’t be limited by the EU, whilst some economists and commentators are sceptical and believe the withdrawal will have a damaging effect on the UK. These contradicting opinions may even be applicable to online business, and even though you still will be able to enjoy online bingo at mFortune, there are real concerns for those importing goods from Europe like French wine or Italian olive oil.
In 2015, the UK exported £133 billion worth of goods to the EU. If this trade continues, it is likely that tariffs will be placed on these products, means that costs will go up for businesses and UK goods will be less competitive globally. If businesses reduce prices to try and counter this, it will mean they make less profit than previously.
A consequence of leaving the EU for business is loss of access to the single market. Economists estimate that this could cost the UK £75 billion, due to no longer being part of the European Trade Agreement which allows the UK free access to this market.
Another huge factor for British business to consider is the uncertainty regarding EU migrants. There are more than 2 million EU immigrants who work in the UK, and their status when the UK leaves the EU isn’t clear. This has resulted in many of these immigrants already looking for work elsewhere in the EU. These immigrants bring vital skills to the IT and construction industries, and also in the unskilled market, filling many cleaning and manual labour jobs. The uncertainty of the status of these immigrants means that businesses have to consider the possibility of not being able to employ these workers in the near future.
Benefits to UK businesses could include the possibility of making deals all over the world. Current trade agreements make it difficult for businesses to operate with countries outside of the EU, meaning that in the future the shackles could be removed and options can be explored with businesses all over the world.
It brings a lot of uncertainty to the UK, but the only thing we know for sure is that nobody can say for certain what position the UK will be in after Brexit. Many forecasters are concerned, businesses are moving some operations abroad and are having to make contingency plans. However, the UK will be in a position to negotiate trade deals outside of the EU, and it does bring new opportunities to the UK.