It’s 9.26am on Friday morning and I have already had several demands from the US, UK and Europe about views on Brexit. Of course we are going to see some short term volatility, but once the children are done throwing their weight around and looking for short term profit what is the longer term impact ?
- Trade agreements are more between companies than countries and they will not change quickly. Indeed exports from the UK will be cheaper for some time now and that could increase market share. Finding new suppliers is an expensive, time consuming process and unnecessary if the trading history is good.
- UK imports will be more expensive “potentially” for a while it really depends what way the FX rates go for both currencies. The current rate at 9.35am is higher (GBP wise) than it was in April this year and no one spoke of a crisis then.
- The UK will look to other markets for expansion, in particular the USA. Despite recent comments to attempt to influence the debate there are many advantages to this cross pond alliance. Language, culture, perceived security, legal frameworks and the cheaper GBP make these trades attractive.
- The largest economies in Europe will suffer for a while now whilst other countries consider their position in the EU. This will include Holland, Ireland, Greece and others. The position for the UK is now clear, the position for the EU is not. Investment and FX will suffer for two years, but I see the main economies (Germany and France) creating a workable framework for the EU to continue albeit a little smaller
- Immigration will NOT stop, or at least immigration from outside the EU will not. The UK has a history of opening it’s doors to those in genuine need and whatever nationalistic fervor might be kindled from this exit, it does not change the core of British fair play. What will change is the right for any EU citizens to move to the UK and work. Less clear is what will happen to those already here. I believe they will be allowed to remain providing they are contributing to society
- The USA will become stronger as it is seen as the most stable and predictable of the major economies today. Over the next two years investment in the US will increase but so will the USD, with an impact on oil prices.
- Finally business will carry on as fairly normal after the initial knee jerk reaction. Holiday makers will pay a little more, inflation will go to 3pc and a new Prime Minister will take over the reigns. The rest is just noise.
These are my personal economic (not political) views. I may be wrong and if you think so please comment so we can all best determine our own paths for the success of our businesses. Whatever the case “we live in exiting(sic) times”