The United Kingdom is due to leave the European Union officially at the end of March 2019 although a intermediate period has been conditionally agreed with the EU whitewall end in December 2020. As the clock is ticking on Britain’s exit from the 28-nation trading bloc – the complex international separation known as Brexit – the country business are under mixed threat.
As ambiguity and unpredictability are likely to have the biggest effect on planned capital investment you must also consider the possible impact of Brexit on areas such as the labor market, trade and regulation. Also, small businesses would find it particularly challenging, especially when they had no experience of trading outside the EU.
Key industries to focus on are:
EU countries provide 10% of hospital doctors, 7% of nurses and 17% of life sciences workers. This would lead to labour shortages post-Brexit and might add extra burden to NHS budgets. Pharmaceuticals will not be subject to import tariffs but non-tariff barriers will likely increase prices. Regulatory arrangements with the EU will be significantly vital.
Food and Farming
Brexit raises many issues such as the future of farm grants, the Northern Ireland border, food standards and employment procedures. The UK farm business have the capacity to increase supply – presently around 1/3rd of food consumed in the UK is imported from the EU and twenty percent of people working in farming are from other EU countries.
“The UK’s departure from the EU will have tax-related implications for telecommunications; identifying and managing Brexit risks will be critical to a company’s overall strategy. Telecom firms need to be prepared for supply-chain disruption.UK consumers will have to start paying roaming charges when in the EU.
Automotive industries & supply chain businesses
UK and EU supply chains are deeply inter-linked. There is a lot of intra-industry trade. In the average UK-made car only 44% of components come from the UK. Component makers face an EU import tariff of 4.5%, vehicle makers will face tariff of 10%. Regulatory agreement will help control non-tariff barriers. Specifically Germany as a foremost net exporter of vehicles into the UK has a strong incentive to strike a deal with the UK on automobile trade rules.
Impact on employment and labor
Ever since the UK voted to leave the EU, the number of migrants looking for jobs outside the UK have spiked up. According to statistics, the UK’s unemployment rate is likely to increase to 6.5% due to recession, which is a loss equivalent to 500,000 jobs.
There are currently 2.1 million European immigrants working in the UK. In industries such as engineering, IT, and construction, where there are shortages of skilled workers in the UK, immigrants from the European Union are filling the void by bringing in vital skills. They are also a major contributor to the unskilled labor market.
EU immigrants also contribute substantially to the healthcare sector in terms of employment. If these EU workers leave the UK, there will be a huge gap between the demand for skilled workers and supply. Thus, the UK’s ability to recruit international talent could be at stake.
The uncertainty surrounding a financial services arrangement has already begun to set off a domino effect, with many banks putting more resources into European hubs outside London – a trend that could very well unseat London as Europe’s financial capital. It could also have negative repercussions on the British economy and, by extension, the global economy, and shift the political and financial landscape in Europe and around the world. If British banks are not granted the extra benefits they are seeking in a financial relationship with the EU, this could give U.S. and Asian financial institutions a boost in Europe by opening up competition. That could potentially have a negative effect on British banks– both in terms of their bottom line and their capacity and appetite for loan origination.
The impact of Brexit is certainly not going to be negative all around. For example, while few investors and lenders may turn their backs on what they fear is a plummeting Britain, optimistic investors may see U.K. properties or shares of U.K.-based corporations as undervalued ‒ and rush to buy at attractive yields.