Yahoo Finance Four ways Brexit could affect your business
If all goes to plan, the UK will leave the European Union on 31 October this year. As we’re all aware, things have a habit of not going to plan where Brexit is concerned, but as things stand we will leave the EU on All Hallows’ Eve 2019, with or without a Brexit deal.
Businesses should certainly prepare with this date in mind. Whatever flavour of Brexit we eventually choose, leaving the EU will have a profound effect on all UK businesses, regardless of size or sector.
That’s why Irwin Mitchell, the national firm of business and personal solicitors, has produced the UK Powerhouse report, in association with the Centre for Economics and Business Research (Cebr). The report focuses on what Brexit will mean for businesses operating in various industry sectors and in different parts of the UK.
We’ve sifted through the research to identify four key ways that Brexit could affect your business. Because – after all – forewarned is forearmed.
1. Hospitality sector staff and labour costs could rise
Even before Brexit has actually happened, many European workers are leaving the UK. Figures released in March found that net migration to the UK from EU countries had plummeted to a 10-year low.
The increased difficulty UK firms may face in employing EU labour after Brexit could impact businesses in any sector, but Irwin Mitchell’s UK Powerhouse report makes it clear that the hospitality sector is likely to be worst affected.
Josie Dent, senior economist at the Cebr, says: “Out of the sectors analysed, these workforce issues are most pertinent in the accommodation and food services sector. In Q4 2018, 13% of workers in this sector were of non-UK EU nationality.”
The Confederation of British Industry (CBI) is similarly concerned, warning that a proposed bar on low-skilled workers (those earning below £30,000) could hurt the UK economy more widely.
2. Tariffs might make British business less competitive abroad
As a member of the EU, UK businesses benefit from the tariff-free movement of goods and materials to and from member states. When we leave the EU, that tariff-free movement cannot be taken for granted.
“Tariffs may impact the demand for goods sold by British businesses, since they will be less competitive abroad,” says Josie. “Brexit will also have an impact on business costs, since if imports become more expensive… many producers that use imports in their production process will face higher costs.”
One sector that might be particularly affected by the imposition of tariffs is automotive manufacture because, as the UK Powerhouse report states, 51% of cars manufactured in the UK were sold in the EU in 2018.
But the fact is that, at this stage, we simply don’t know whether British business will face more tariffs or not. That will depend on the Brexit deal. As Josie says: “Of course, the trade relationship the UK will have with many countries once we leave the EU is unknown, and we could end up in a situation with very few tariffs.”
3. The North-South divide may continue to widen
The effect Brexit has on your business will partly depend on where in the UK you are located, according to the Irwin Mitchell UK Powerhouse report. The report predicts that, without government intervention, the North-South divide will continue to widen after Brexit.
“Cebr forecasts that the fastest-growing sectors in the UK once we leave the EU will include information and communication, distribution and storage, life sciences and other professional, scientific and technical activities,” says Josie. “These sectors are currently concentrated in cities in the south, including London, Reading, Oxford and Cambridge.”
This isn’t just an issue for companies in these sectors. A profitable communications business, for example, might invest in new offices and infrastructure, while its growing workforce spends money in local shops and restaurants. A thriving sector drives a wider regional economy, and the sectors most likely to thrive after Brexit are currently concentrated in London and the South rather than the Midlands and North.
4. Reduced regulation could benefit some industries and businesses
The Irwin Mitchell UK Powerhouse reports predicts that the construction sector could see a slight acceleration in growth in 2020, despite the uncertainty that leaving the UK will bring. In fact, construction might be a long term beneficiary of Brexit, if it leads to reduced red tape and more straightforward planning and building bureaucracy.
Josie believes that one potential economic benefit of leaving the EU will be regulatory autonomy. “The UK will likely be able to set its own regulatory policies to fit the industries in the country best, helping some sectors thrive.”
Of course, trade with the EU will still be governed by EU laws. But if your company does a lot of trade with countries outside the EU, the UK’s ability to set a national regulatory framework may work in your favour.
With over 1,000 legally trained staff in offices across the country, Irwin Mitchell solicitors provides clear, straightforward personal and business advice with a human touch. If you need legal advice and assistance on navigating your business through tough times, call Irwin Mitchell on 0808 274 1761.
