The last four years have been filled with Brexit uncertainty. Businesses are now facing the end of the transition period and need to plan. Every business will be affected by Brexit, but some businesses will be impacted more than others.
Brexit will impact everybody living in the U.K. So, how has exiting the European Union impacted business in the U.K.? Read on to find out.
Farming remains one of the cornerstones of the rural economy in the U.K. At the same time, non-farm income is important in bolstering the economic welfare of most U.K. farmers. That’s why farmers have been warned doing nothing is a’ high-risk strategy.’
The U.K.’s exit from the E.U. has vast implications for food security. A significant percentage of U.K. agri-food imports come from the E.U. The government has made it clear that it would obliterate the tariff wall on food. This will ensure minimal disruption to supplies after the country leaves the E.U. However, leaving the E.U. means leaving the Common Agricultural Policy (CAP). This means the U.K. agriculture sector will lose the E.U. funding for farming.
The U.K. fashion industry contributes some £32.3 billion to the nation’s GDP. At the same time, the British fashion industry relies on international trade. Annually, the U.K. imports around £10 billion worth of fashion items from the E.U.
Navigating a post-Brexit British fashion industry raises a lot of concerns.
Fashion firms want clarity on tariffs, migration, and regulation. They are also worried about the delivery times, with customs possibly holding fashion items for extended periods. Will new taxes or trade laws affect overheads? Fashion firms also want to know the impact of Brexit on temporary warehousing.
Duty costs would materially increase, which would be a headwind in terms of profits. This could also mean buying your favourite brand may cost you more. In fact, the average retail spending by Britain’s shoppers is at its lowest since 1995.
In 2018, the banking industry sector contributed £132 billion to the U.K. economy. Banks will bear the brunt of Brexit over both the short and long term. Many banks may have to reassess their European structures. They will need their own capital, liquidity, corporate governance, and fully-fledged operations.
Experts estimate British banks have to move more than €1,200 billion of assets to their euro area entities. They will also need to set up the required legal entities to maintain operations in Europe. Knowledge process outsourcing is another option that could be considered.
Fortunately, most of the U.K. financial services legislation derives from the E.U. There’s an opportunity for small banks to insulate themselves from the negative impacts of Brexit. Fintech companies will be the main players in ensuring seamless trade between the U.K. and E.U. However, we can expect a drop in business investment.
Britain is today the ninth largest manufacturing nation in the world. At the same time, manufacturing makes up over 10% of GDP. U.K. manufacturing is tightly linked with the European Union in a number of ways. Consequently, Brexit will have a long-lasting impact on the British manufacturing sector.
There are fears that the British manufacturing sector is about to enter a period of decline. Manufacturers have reported cutting production over the last six months. Thus, the U.K. government will have to introduce new policies on skills, R&D, financial support, and wage subsidies. Smart and transformational technology may allow manufacturing firms to build up inventories and boost new orders. Other manufacturers may have to undertake frantic stock-building.
Brexit has dire consequences for the transport industry because it will become an additional stop and incremental cost in the supply chain. UK-licensed airlines have ceased to be “Community air carriers.” For the same reason, cabotage restriction would mean that British airlines have to apply for two separate sets of operating licenses.
Additionally, shipping lines are now adding surcharges while containers are being left behind at the quayside. To minimize delays, the Port Authority is consulting with terminal operators.
Brexit has already had a major effect on the U.K. mineral industry. However, a major change in the mining sector is only likely in the long-term. This is because the U.K.’s mining industry has very different dynamics from other countries in the European Union. Additionally, British mining companies have been lobbying the government to deregulate the mining industry.
In the short term, Brexit will be a good buying opportunity for mining companies. Research shows that the top 40 mining companies have shown steady growth this year. This is mainly due to the fact that their operations are dollar-denominate. Therefore, London will continue to be an ideal location for mining headquarters. It’s likely to continue to be home to the likes of Rio Tinto.
Brexit’s effects will change the entertainment industry. Some consumers may now move towards purchasing products that are made in the U.K., such as an appliance for outdoor entertainment. Others may have to learn new entertainment tricks, such as grilling meat using the original backyard barbecue method.
Conclusion Brexit will have major implications for the United Kingdom for years to come. This is a massive change, and businesses need to be in a better state of readiness.