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How will Brexit Affect UK Businesses?

Companies / SME Mar 31, 2017 - 04:00 PM GMT

By: Submissions

Companies It’s fair to say that the EU referendum, and subsequently Brexit, is already having a major effect on UK businesses; and it will continue to do so throughout the whole process.


UK businesses based abroad

There are many businesses that originated in the UK that are now based abroad. This is for many reasons; more often than not, tax related. You’ll often find businesses’ that operate in the UK such as online casinos and bookmakers are based abroad; (EU member countries such as Luxembourg play host to a number of UK businesses) .With the laws about to change on UK businesses trading in, and with countries in the EU and Brexit has potential to cause problems for those businesses.

Although it’s yet to be clarified what the implications will be for these kinds of business, but what is sure is that they will have to make changes to the way they currently do things.

The drop of the £

As soon as the results of the EU referendum were announced the pound dropped like a stone. The pounds value in the US dropped 17 cents immediately after the results were announced. Since then we have also seen the pound drop to its lowest ever worth against the Euro.

The lower value of currency is of course a major problem for UK businesses. It obviously has a direct effect on those who trade with European countries, yet it also impacts those who don’t. As the UK imports so much of its good from wider Europe, the fact that the pound is of less value will mean prices of products as a whole will rise.

This situation doesn’t only affect businesses; it affects the general public as well. If businesses have to pay more for their products and services, they will of course pass the cost on to their customers.

Share prices

The UK-focused FTSE 250 has suffered quite a lot since the UK voted to no longer be part of the EU. In fact, UK share prices on the whole took a pretty tough whack in the markets post referendum, however they have begun to claw their way back as more light is shed on the situation.

With article 50 now having been pushed through in Parliament by Theresa May the beginning of the official Brexit process looms large. There are discussions to be had regarding trade and tax with the EU and the outcome of these will no doubt determine how UK share prices sit post-Brexit.

It remains to be seen how the events that will occur during and after the Brexit process will actually affect UK businesses. Some people believe it will be a positive as the UK will no longer be constrained by the EU regulations; whereas others believe it will be harmful to businesses, especially those who currently trade across Europe.

Despite the uncertainty, it’s safe to say that there will be some major changes to the rules and regulations that govern the way we conduct business.

This is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any investing and trading activities.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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