The United Kingdom, the second biggest economic power in the EU (GDP 2015) has recently voted to withdraw from the EU, after a hard-fought and very controversial campaign and unprecedented mobilisation. The outcome of the referendum leaves the country divided in many ways (roughly speaking, with rifts between the young and the old, London and the countryside, white and blue collar workers, etc. highlighted at nauseam by the press), and a political landscape in turmoil, not to mention a shift in the balance of power across Europe. No contingency plans were made should the Brexit vote win, and the uncertainty of the referendum outcome has shaken the financial markets and the value of the sterling, with talks of relocations and recession, higher consumer goods and cuts to public budget forecasted.
The economic and political reverberations from the British referendum will be felt way beyond the European shores, as far as Asia and Africa for instance, in countries that were formerly part of the British Empire and benefited from the UK’s membership of the EU. There will be an impact on all countries and businesses trading with the UK both in terms of competition, sales and manpower.
The EU would like the withdrawal proceedings to start quickly both to reduce uncertainty and to avoid political contagion; there will be however no triggering of the Article 50 of the Lisbon Treaty until the new UK Prime Minister has chosen a dedicated team for the many negotiations to be conducted with the EU, which will spread out at least over 2 years (although experts say it may take up to ten years).
The UK is a key partner for several industry sectors including automotive, food and machinery, and the services. Businesses on the continent will be wondering what the impact of Brexit will be with regards to competition and export as well as whether or not they will benefit from the withdrawal of such an important EU member to increase their sales.
Meanwhile, we are in unchartered territories and it is highly recommended, on both sides of the Channel, to enforce the war-time British motto: keep calm and carry on.
The truth is that there is no foregone conclusion: we have no idea who will be involved, what will be negotiated, what reciprocal concessions will be made and what the timeline will be; in the meantime it should be business as usual under the current EU rules - as much as possible.
Rather than just facing the doom and gloom, why not try to imagine the upcoming changes at European level as bringing about new and different opportunities for businesses? The prevailing uncertainty will only be short term. Little by little, the dust will settle and a new status quo will resume. From a global perspective, no-one would benefit from side-lining the 5th economic power.
During this transition period, it would be wise for European businesses, to find the necessary resources to invest in the objectives set for their continuous development: new/upgraded premises, staff training or recruitment, new machinery, R&D, etc. or simply to remain competitive in more uncertain markets. With the support of international advisors familiar with cross-border operations and supply chain management, businesses would benefit more than ever from streamlining their cost management and preparing for the future.