Brexit Consequences - 9 Ways Brexit will impact companies

With the referendum vote for the UK to leave the EU resulting in the departure of the UK from the union, companies not only nationally, but globally will be affected in multiple ways. Economic impacts will take place as well as potential relationship breakdowns. Let’s take a closer look at the details.

Relationship Issues

The political fallout could have an effect on the UK businesses that have European connections. Customers and consumers may find Britain’s actions petulant and refuse to do further business with the UK. This attitude could then drive them to other trade blocs within Asia and grow their business there.
Trade

The European Union is the UK’s biggest trading market. Before Brexit, Germany was one of our most important partners; the UK imported £56 billion worth of goods from Germany whilst exporting £30.8 billion. With the European ties to be cut, could this be the end of one of our biggest trade partnerships? Not only will it cause disruption within Europe, the US has also stated that a Britain outside of the EU will find it more expensive exporting goods to the world’s largest economy.

Having said that, with fast growing economies in Asia and Africa, leaving the EU could open new doors to trade with them. It will also encourage business owners to be more creative when selling in order to capitalise on these new markets.

Business Models

A lot of companies may have to restructure their business model in order to cater for the European business they may not get. Marketing plans, audience targeting are just a few of the aspects which can be affected by the exit of the UK. However, if these are not able to change, then it could be a heftier cost in order to do business with the EU.

For niche markets that primarily sell in Europe, they could be in danger of liquidation as the majority of their revenue were coming from the EU. Without the sales of the European countries, it could take a turn for the worse for some.

Market Volatility

For some products, the volatility, or how fixed their prices are, can change dramatically. With the uncertainty of trade now beckoning, the prices are bound to fluctuate immensely. The prices of certain products that remained steady, are now in question due to Brexit. If your product is required globally, this shouldn’t affect you too much, however for those with a more concise market, expect to sell at a price that could be much lower than what is considered ‘average’.

True and Fair

Within your annual financial statements and your half-yearly reports, there is a rule of thumb which states that the reports must be shown as truthful and provide a fair view. We encourage directors to give additional disclosures to ensure that this rule stays intact.

Confidence

Business confidence has plummeted since the decision to leave the EU was finalised. Not only will this impact specific individuals, but it will also affect a much larger audience than that. If there is no confidence in the seller, how will they sell? They are practically admitting defeat before they’ve reached their end objective. This will then have a knock on effect in the sales chain and result in the consumer/buyer being affected. With the sales process damaged, the lack of trade will cause a different problem altogether.

Employment Law

Another key impact because of Brexit is the employment law; more specifically accountants. Any accountants are currently allowed to work in any of the EU states providing that they undergo top-up training for their specified destination country. However, because the UK has now left the EU, this has now changed. We will have to wait for new laws to be unveiled before anything is concrete.

Tax Law

Having previously been a member of the EU, we had to follow the agreed EU tax laws. Now that we will no longer be a member, it means that we can now register our own tax laws. This can apply to both citizens and businesses. As well as that, the EU’s proposed gold plating OECD model may not be introduced for UK registered companies, and any future EU taxation laws would almost certainly never apply in Britain.

The Pound

With the pound falling sharply immediately after the vote, what can we expect with it in the future? It means that buying goods or services from other countries will become more expensive resulting in a higher inflation meaning that any goods we sell will be cheaper for the buyers.

If you are concerned about your business finance, call us for a no-obligation chat on 01252 312561 or you can email us at info@keith-graham.co.uk. Alternatively, you can fill out our online contact form and we will reply as soon as we can.