Some key impacts of Brexit will be:-
The impact on currency rates:-
There is no question that the weak pound means importers are struggling with their costs rising which quite often they cannot pass on to their customers due to a competitive marketplace. This is particularly true when it comes to food. It has been widely reported in recent years that the UK imports a significant portion of its foods with some reports stating this has risen to over 50%. Due to a highly competitive market place, especially for supermarkets, and dealing with customers’ expectations, it is a difficult time for importers.
But what if you are an exporter? You could use the weak pound to your advantage to trade with foreign customers that previously it would have been uneconomic to do so. Even if you are not traditionally an exporter it is something to consider at this time as you may be able to undercut foreign competitors without affecting your margins. The weak pound is also a good opportunity to lock in forward contracts at a better rate than if the pound was strong.
If you are unable to export your goods or services, you can still use the weak pound to your advantage. You may not realise but quite often a significant number of your competitors will be foreign and therefore will be struggling to import and sell goods in to the UK profitably due to the exchange rate.
Tourism can also benefit significantly from a weak pound, which will include the restaurant and hospitality sector. Those in other parts of the world will get more pounds for their currency, which in turn will make the UK a cheaper and more attractive destination. More visitors will mean more money spent by tourists and as a result more businesses will benefit.
Currently the biggest unknown is what trade deals the UK will be able to agree with the EU and other worldwide trade partners. There is no doubt that the collective bargaining power of the EU gives it an advantage over a single country when trying to negotiate a trade deal. You have to remember that not all members of the EU will have the same priorities when it comes to agreeing a deal and there will be a compromise on certain aspects of any deal to try and keep all parties happy.
The UK is still seen as a big player in the global market place and therefore countries will be looking to get new trade deals in place now we are leaving the EU. This gives the UK a great opportunity to negotiate trade deals without the worry of pleasing every other member of the EU. This could mean the UK can negotiate better deals and will benefit businesses based here.
By leaving the EU it also opens a number of other market places for the UK to buy from. For example, the UK can return to buying cheap food in particular, outside the Common Agricultural Policy.
Although leaving the EU brings its difficulties, which have been widely reported, it does provide a great opportunity for UK businesses.