UK Business in Limbo in the Face of Years of Brexit Uncertainty

Being part of the EU guarantees no tariffs on trade on goods and services and the free movement of workers.

Published28 Jun 2016, 11:33 AM IST
World
3 min read

The impact of Britain’s vote to leave the European Union was swift and painful for Ed Bussey’s small tech firm in London.

The founder and CEO of Quill, an online content company, had been looking to fill a software development job paying 70,000 pounds ($95,000) a year, that’s been open for six months. He had a job interview set up with a promising candidate from EU member Italy on Friday — the day after the vote.

Because of what had happened on Thursday, he was not prepared to up sticks and move to London.
Ed Bussey

He said, “Look, I’m not sure I’m not going to get booted out in two years.”

Businesses in Britain already are seeing the impact of the seismic vote to have the country leave the other 27 nations in the trading bloc and strike out on its own.

Being part of the EU guarantees no tariffs on trade on goods and services and the free movement of workers, without the hassle of visas or work permits. Now that it is leaving, Britain will have to first negotiate its exit, which could take years, and then renegotiate new relations with Europe, which could take even longer.

Moving Out of the UK

A leading business group said 20 percent of its members plan to move some of their operations outside of the UK to be closer to clients on the mainland.

The Institute of Directors (IoD) said on Monday that a survey of its 1,000 members showed that three out of four believe that Brexit will be bad for business. About a quarter said they would freeze hiring and 5 percent said they would cut jobs.

Ultimately we think that our members are very resilient, we think that British business is tough and will adapt but certainly at the moment there is a lot of nervousness out there in the business community.
Edwin Morgan, IoD spokesman
Demonstrators opposing Britain’s exit from the European Union in Parliament Square.(Photo: AP)
Demonstrators opposing Britain’s exit from the European Union in Parliament Square.(Photo: AP)

Profit Warnings

Companies are already issuing profit warnings. Real estate agency Foxtons has said it is no longer confident that business will improve in the second half of the year as it had expected before the vote. The parent company of British Airways, IAG, warned on Friday that profits would take a hit this year, as did budget airline easyJet, saying it anticipates economic and consumer uncertainty this summer.

Multinationals that have chosen the UK as a base for operations across the EU are expected to reconsider some of their operations in Britain. Global banks like JPMorgan, Goldman Sachs and HSBC have said thousands could move to the mainland.

People protest Britain’s exit from EU as small business are being hit big. (Photo: AP)
People protest Britain’s exit from EU as small business are being hit big. (Photo: AP)

Smaller Businesses Hit Big

But the turmoil is perhaps tougher for small business owners like Bussey, whose 25-person firm doesn’t have a phalanx of lawyers and a human resources department — never mind facing the expense — to seek out software developers outside of the single market.

In effect, it is closing the door on fast-growth businesses like mine in terms of hiring the best talent in Europe.
Bussey

And he’s not alone. Artisan London perfume maker Sarah McCartney has found Britain’s choice to leave the EU has already bruised her small business, called 4160Tuesdays.

The future doesn’t smell so sweet at the moment. I buy raw material from Europe, and I sell to Europe. I just think it is going to become a heck of a lot more complicated, and it has already gotten more expensive.
Sarah McCartney

Italy was supposed to be Sarah McCartney’s next export market, but the uncertainty of whether she soon will be buried in tariffs, duty and paperwork has left her doubting if she should enter Italy at all. Now, she may not participate in Italian perfume trade fair next week that was meant to be her way in.

The plane ticket alone is expensive — never mind the uncertainty of why she should go in the first place.

We'll get through this! Meanwhile, here's all you need to know about the Coronavirus outbreak to keep yourself safe, informed, and updated.

The Quint is now available on Telegram & WhatsApp too, Click here to join.

Stay Updated

Subscribe To Our Daily Newsletter And Get News Delivered Straight To Your Inbox.

Join over 120,000 subscribers!