Brexit, What It May Mean For Your Business
Brexit, the first time I heard the word I thought it sounded more like a breakfast cereal than a potentially generation changing referendum. Once I started to look into what Brexit may mean for businesses I realised that it is anything as simple as your first meal of the day.
Let’s be clear. The only certainty around Brexit is uncertainty. Should the decision be to leave the EU then it will create uncertainty, however should the decision be to stay there will be an equal amount of uncertainty, neither path appears to lead to instant stability.
Let’s look at what an exit may mean for the UK and small business.
The Brexit Exit
Firstly London could no longer refer to itself as being the financial centre of Europe, an exit vote would publicly denounce that, it would be outside of the EU and unable to influence EU fiscal decision making.
That means that the Treasury and Bank of England need to provide clearer guidance and light a path as to the future of London as a financial centre. The volatility of an exit would likely see the value of sterling fall, equity prices to fall and depositors starting to question where they hold their deposits.
What it also means is that regulation becomes a UK centric decision and that London could use the newfound freedom to compete as a pro-business destination. It could see London once again take the lead as the destination for global enterprise.
One common opinion is that a sudden end to trade with the EU is unlikely, ways round things will be found. If history tells us anything it is that the desire for profit drives innovation and a way to get things done is usually found.
Let’s Stay Together
There is an equal level of uncertainty here also. The referendum itself is akin to opening a Pandora’s box of awkward conversations.
The UK already had a long list of proposals it wanted to introduce into the EU, with a stay vote it will appear that these changes are less about the good of the EU but the good of the UK.
The status-quo changes whichever way the vote goes.
The problem for businesses is that access to finance and consumer confidence are big drivers within the SME space. Leave or stay, economic forecasting gets more difficult, activity and employment become more volatile and the ability for any Government to plan accurately gets more difficult as income and expenditure become subject to greater volatility.
Someone Must Know
There is a common opinion that the ‘experts’ must know what would happen should we have a Brexit or Non-Brexit. The answer is that nobody actually does, simply because it has never happened before. If you want an economist to clarify it then it is not going to happen, regardless of what you think they should be able to do.
Nobody saw Leicester being 7 points clear at the top of the Premier League, and a lot of ‘experts’ were asked their opinion at the start of the season. If you want any one certainty from the Brexit debate then it is uncertainty.
By Dave Farmer
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- David Green, former head of European business at BofE
- IFS Financial World April 2016