Uncertainty is one way of preventing growth and the lack of conclusive decisions creates an atmosphere of commercial gambling and the uncertainty generated as a result of Brexit has left many businesses stagnant.
According to a survey carried out, 36 percent of CEOs and CFOs said Brexit is at least one of the top three current sources of uncertainty. Such uncertainty leaves businesses stranded as decisions cannot be taken for fear of the consequences should the Brexit not reflect their strategies.
Although with Britain leaving the European Union, it creates the United Kingdom the freedom to explore other trade opportunities, the potential consequences of this decision could mean the reduction of sales by 3 percent on average across businesses while also having a negative effect on exports with unit costs, labour costs and financing costs expected to increase. This could result in a devastating blow to the economy.
However, this might seem a bit confusing especially when trying to figure out how exactly this impacts businesses in the United Kingdom before the Brexit deal is finalized and what will subsequent outcome be for the United Kingdom. With regards to businesses in the United Kingdom, there are two key factors which have left many businesses uncertain.
Due to the uncertainty surrounding Brexit businesses have been unable to take any decisions. With Brexit hanging over the heads of businesses, the impact on immigration could result in a fast reduction in workforce which will invariably run the business at a loss.
Immigration becomes a major concern for businesses, especially as regards employment of workforce, accessibility of talents and the efficient movement of staff. With Britain deciding to form their own rules regarding immigration and migration investors and businesses are skeptical on what the new rules regarding migration and immigration for EU nationals will be and as a result businesses are slowly pulling out thereby crippling the British economy.
The cost of goods will be affected by factors such as; tariffs, labour costs and red tape on imports. Although Brexit allows the United Kingdom the freedom to venture out and establish new relationships with other countries, the implication of this on importation is the increase in cost for goods from the EU. If tariffs increase, businesses will be left with no choice than to pay the increase in cost which will eventually eat into profits of the business. This increase will be reflected in the cost of goods in supermarkets thereby placing financial demands on customers as prices hike up in other to supplement for the difference.
As important as tariffs are, they only make up a portion of the import cost of each product.
Finding cheaper products to be imported does not necessarily lead to lower prices for shoppers. The financial capability of each individual is unique to himself/herself and as such when prices are hiked up; it creates a disparity between those who have the financial capability and those who do not. Asides tariffs, factors such as; paperwork, time spent at the border and custom checks contribute immensely to the cost of importing goods. After Brexit, these red tape costs will increase, making EU imports slower and more expensive. Businesses at this point can only wait and inspect the flow of tides with the hope of not being severely disadvantaged.
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Tom Street qualified as a solicitor in 2003 and has over 20 years experience in employment and litigation law. He studied law at the University of Manchester before undertaking the legal practice course at the College of Law in Guildford, going on to complete his legal training at a firm in Chancery Lane, London. Once fully qualified, he moved to a niche litigation practice in the City of London.
In 2010, Tom set up his own legal practice, Tom Street & Co Solicitors and as part of this, in accordance with his strongly held objective to provide everyone with an easy pathway to justice he established the online portals Do I Have A Case? and Tribunal Claim. These websites are trading names of Tom Street & Co Solicitors.