Doom and Gloom? Or opportunities with Brexit?
Brexit is the most hotly debated topic in Britain right now. It is expected to have a great impact on the economy as we move away from the European Union and go our separate way in terms of border control, tariffs and international trade.
It is not so much a question of when Brexit will happen but how. One major concern for businesses and governments is what kind of post-Brexit relationship will we have with the EU?
Many believe that the deal that is being offered by the EU, in terms of trade and movement, is very bad. The UK taxpayers will be required to bear the burden of additional 40 billion Euro in payment without any significant benefits in return.
In 2016 we had the Brexit referendum, an open referendum to decide the membership of UK in the trade union. The majority of people voted to leave the EU and the UK government formally started the 2-year process of separation from the trade union which will conclude in 2019.
As we approach the end of the 2 year period, we have yet to negotiate and finalize our bilateral relation with the EU. The British PM Theresa May is at an all-time low in popularity. She had previously stated that no deal would be better than a bad deal and she faces challenges from both the leave and remain campaigners in the parliament.
However, economists and political analysts are beginning to question the wisdom behind this way of thinking. We have been told recently that some 80 percent of the withdrawal terms have been agreed to, with the remaining 20 percent still up in the air. If an agreement is not reached with a 100% consensus we may get no deal with the EU.
It really isn’t clear what the effects would be of a no-deal situation. The UK government has stepped up preparations for a no-deal scenario which means we are headed for what is being called a ‘hard Brexit’.
Economically speaking, things will be a challenge
Brexit is expected to cause major disruptions to the UK economy. Many believe that it will negatively affect the UK. New tariffs between the UK and EU could significantly reduce trade as free movement of goods will no longer apply.
While this poses some challenges for the UK businesses trading with Europe, it also opens up opportunities.
In a bid to keep economic impact minimal, the UK government has relaxed its trade policies towards Non-European nations. UK is looking in particular towards Commonwealth countries, such as Australia and New Zealand, to help stir our economic growth.
Negotiations are under way to relax imports from and exports to these countries. The government is also planning to make it easier for businesses from the Commonwealth countries to open their operations in the UK.
Businesses from Australia, China, India, Canada, New Zealand and South Africa are eyeing these opportunities with great interest. We hope that with enough incentives from the government, a large number of companies will set up their operations here in the next couple of years.
Building Closer Ties
The recently wedded royal couple, Prince Harry and Meghan Markle announced that they were going on a tour of Commonwealth nations in the coming weeks. It is quite obvious that it is another part of the government’s plan to warm up to these countries and encourage businesses to come to the UK.
During a recent event, the Prince hosted youth from the Commonwealth nations, encouraging them to be champions for their communities. Young people from countries as diverse as India, the Caribbean, South Africa, Australia and Hong Kong attended the event. It was quite an inspirational experience for everyone.
The effort to improve collaboration between UK and Australia is already under way. The British defence company BAE Systems was chosen to build a fleet of nine Type-26 Hunter Class frigates in Adelaide. The new ships will be built by the Australian government-owned company ASC Shipbuilding and the first few will be completed by 2020.
The South Australia Premier Steven Marshall and British Foreign Minister Boris Johnson believe the project was a sign of a strong bilateral relationship between the two sides. Steven Marshall was in the UK recently visiting the sites and formally welcoming the collaboration
How to Make the Most of It
Many businesses from Non-EU countries see Brexit as a great opportunity to market their goods and services into UK. Many of my clients have asked what it means and what opportunities does it bring.
Well, the EU and UK are likely to impose tariffs on one another. This will make EU products more costly giving a chance to products from other parts of the world to take up a share of the market. The countries from the Commonwealth are likely to benefit the most if we can get a trade agreement with them.
The real questions you should be asking are whether to enter the market before 2019 or after the Brexit has taken place? There is going to be some uncertainty in the UK, politically and economically and that should be taken into account.
You will also need to consider the new Visa requirements and set up costs. Will you trade locally or aim to cover a bigger geographic area?
My suggestion is to start doing the research now and plan to make the most of it. You could find significant differences in the market depending on whether you choose to come now or post Brexit.
For some industries, the change in EU rules will benefit them more. For others it would be better to set up operations now and get established before competitors arrive.
- Australia and New Zealand have booming agriculture and food industries which can easily replace the agricultural imports that we get from EU. Exporters from New Zealand can do really well in exporting lamb here, which was previously hindered with EU regulations. Aussie dairy products can also do very well.
- UK is a good market for Australian natural resources and minerals. Natural ores, coal, wheat, crude oil and pharmacy industries can replace EU businesses very well.
- Students from Australia, New Zealand and India can also benefit by the UK education standard which remains the best in the world.
Partnering with a local business expert can make all the difference. Global Front Room is linked with a large number of business professionals that can offer advice and help you connect with local suppliers and service providers. Join our network to find out how we can help your business set up in the wake of Brexit.
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