Start the stampede of UK companies after Brexit

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Brexit. According to The Economist, Vote Leave designated as the official pro-Brexit campaign group claimed that business was evenly divided, yet most polls by trade associations found big majorities for staying in the EU before the referendum.

A survey by the Confederation of British Industry (CBI) demonstrated that 80% of members supported Remain and only 5% agreed with the Leaving position.

In response to claims that it represents only big companies, the CBI pointed out that it speaks for 190,000 members, mostly small and medium-sized enterprises, and that 71% of SMEs wanted to stay.

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The Institute of Directors and the British Chambers of Commerce found most in favor, and a majority of the Federation of Small Businesses narrowly backed Remain.

Hilary Jones, a director at UK cosmetics firm Lush said the company worries about the economic impact. She comments that the firm’s Dorset factory will continue to produce goods for the UK market. The new plant in Germany will produce products for the European market.

By August the vote share prices in the UK had recovered, with the FTSE 100 trading higher than before the referendum.

The broader FTSE 250 index, which includes more British-based businesses, remained about 1.5% lower than before the Brexit vote.

Retail sales figures for July were up in the same period last year, defying predictions of a post-Brexit slump. Besides the UK industrial output grew at the fastest rate for 17 years in the April-to-June quarter, up 2.1% compared with the first quarter of the year.

The Office for National Statistics

Said “very few” respondents have been affected by the uncertainty from the referendum vote.

However, the Bank of England has announced additional measures to stimulate the UK economy amid uncertainty over Brexit and worries about productivity and economic growth, cutting interest rates from 0.5% to 0.25%, a record low and the first cut since 2009.

Another key plank of its stimulus policy buying up UK government bonds has run into trouble after the Bank failed to find enough sellers of long-dated government debt.

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Four of the biggest US banks have committed to helping maintain the City’s position, but HSBC, one of the largest banking and financial services institutions in the world, indicated that will move up to 1,000 jobs to Paris, the BBC understands.

Some UK exporters say they’ve had increased orders or inquiries because of the fall in the value of the pound.

Pest control firm Rentokil Initial says it could make £15m extra this year thanks to a weaker currency, but many UK companies are willing to keep the profit planned before these sudden events.

There Are Many Sides To This Coin

Some businessmen agreed with Brexit such as James Dyson, of the eponymous manufacturing firm, and Alan Halsall of Silver Cross, a pram maker who believes EU rules hamper the export of his products.

Many small firms think that, since they do not export at all, they should be exempt from Brussels rules.

But Paul Drechsler, president of the CBI noted that 25 years of single-market integration created a supply-chain network so dense as to make such compartmentalization impossible.

There are also expectations about Japanese firms in Britain that may switch investment to continental Europe, and there is no doubt that an absolutely important element to consider for exporters is the importation fees from the EU.

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Plus, as The Economist asserts, Britain’s manufacturing sector is quite small; the last big decline in the pound in 2008 and 2009 did not eliminate the current account deficit.

A lower pound means higher inflation, which apparently could lead to “Brexit taxes” in the form of higher petrol prices, and thus a squeeze in living standards.

In the Netherlands, many companies believe Brexit could be a positive thing for the country’s economy.

Strategic Consultant Cor Molenaar.

Thinks several international companies want to operate in the EU, will now skip the UK and settle in the Netherlands.

“Because there is no language barrier, US companies see England as the gateway to Europe. New e-commerce companies prefer to settle in the UK. But with Brexit, there will be import fees from the EU, so exports from the UK will become more expensive”. He said.

“Will the UK still be that interesting for these American companies? They will undoubtedly find another country as their starting point.”

He also said the Netherlands is a friendly country for the US. It has good logistics and the Dutch speak English well.

“Warehouses will be built near Venlo and there will arise a huge logistic hub. Amsterdam is already the internet hub for Europe and will only become stronger.”

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But an important element is all the protectionism policies involved in EU regulations. As the Brexit Movie explains widely, corrodes markets, and hinders the entrepreneur’s competitiveness. It’s been breaking the UK’s competitiveness potential.

According To The 2016 Country Report.

The United Kingdom is provided by the E-commerce foundation. UK ranks fourth on the Logistics Performance Index (LPI), only behind Germany, the Netherlands, and Belgium.

This reflects perceptions of a country’s logistics based on, and efficiency of the customs clearance process, and quality of trade. Besides Transport-related infrastructure and ease the quality of logistics services.

Any local or foreign retailers need to understand UK customer habits and expectations. Which are typically higher than they are in the rest of Europe.

These companies realize that the UK focus on the market is – price-driven -. So understanding how customers respond to pricing and promotions is key. After all, EU law still stands in the UK until it ceases being a member.

The UK will continue to abide by EU treaties and laws, but not take part in any decision-making.

The terms of Britain’s exit will have to be agreed upon by 27 national parliaments. A process that could be taking some years, considering Article 50 has not been used yet.

So adaptation and flexibility are values that will make a difference in the company’s behavior. Their success was upon British consumers.

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