The European Union (EU) referendum divided the nation earlier this summer and has consumed markets across the UK ever since. From agriculture to healthcare and from education to construction, businesses in every industry will feel the effects of Brexit once Article 50 is invoked.
With the recent appointment of former home secretary Theresa May as prime minister and the subsequent cabinet reshuffle, uncertainty as to where the UK is heading has started to subside. Nevertheless, the question on the lips of many businessmen and women remains the same - what will the future hold for UK business in the aftermath of leaving the EU?
Technically, the EU referendum result is merely an ‘advisory’ and is no way legally binding. Many lawyers, businesses and other important organisations opposed the vote to leave and called on the government to conduct an independent investigation into the costs and benefits of withdrawal before making the decision to exit.
However, the likelihood of the UK remaining part of the EU is unlikely, as a freedom to vote is the core principle of what makes the country a democracy. Mrs May also fully intends to lead the UK out of the EU, claiming that she would create a new model that suits both parties. For businesses with EU nationals already working in the UK, the prime minister said that it was her intention to guarantee their status, while restricting the free movement of EU nationals into the UK in future.
Many big businesses, such as accountancy firm KPMG, have seen a huge rise in clients seeking advice on what they should do next as a result of Brexit. With the official withdrawal process, which will include much discussion and negotiation between officials from the EU, likely to take two years or more, many businesses are being encouraged to adopt a ‘wait-and-see’ approach.
This two-year period allows businesses enough time to come up with a productive strategy and assess possible outcomes. As it stands, there are three main areas that are of concern to businesses in the UK: what this will mean for EU workers, what it means for their supply chain and how it will affect their cash flow.
However, there could be business opportunities for companies who can offer their expertise and judgement to clients in such times of uncertainty.
In the wake of Brexit, Britain will have to reach a new trade agreement with the EU, which is likely to be a complex process, especially with the pressure of a two-year deadline.
Negotiations will include the consideration of the framework for exporting and importing goods and the basis for continued services trade to and from the EU. Further to this, customs procedures, passport control for business travellers and regulation on issues surrounding environmental and health and safety standards will also have to be reconsidered.
There are also concerns over whether or not UK goods and services would have tariffs imposed, which is possible. For example, Brussels could impose a five per cent tariff on all UK car exports and in turn the UK could threaten tariffs on other car imports, but this would result in consumers on both sides of the channel suffering.
Although Brexit was not the route that many businesses in the UK wanted to venture down, the reality means that now is the time to start thinking about the best way to plan for the future. Change is happening, which means businesses must be ready to adapt to new beginnings.