It’s certainly a no-brainer that Brexit will have a crippling impact on the global economy but mostly on several UK, EU, US, and Australian businesses, let alone SMEs trying to find a fit in the market, who are undoubtedly the most affected.
While politics are busy with general elections and in heated debates over the new deal negotiated by PM Boris Johnson, rising uncertainty about whether or not a deal will be struck before January 31st, yet another extension of the then October 31st deadline, desperation and uncertainty become essential emotions to stomach for business owners who long for an end to the saga whatever the terms.
Uncertainties
Looming uncertainties have hit the business environment and leaders alike on the fact that PM Boris Johnson’s deal might not offer all the benefits of a smooth withdrawal as the EU stringent agreement will force an erection of trade barriers that will leave the UK businesses further disadvantaged and will significantly impede growth.
An October 2019 survey conducted by the Institute of Directors (IoD) suggested a rising need to push either for another referendum or a general election to avoid a no-deal scenario. Only a small majority were “ayes”, supportive of PM Boris Johnson’s deal to be passed.
The slump in business confidence in the UK market, however, is realistically growing and forcing banks and companies to review their operations swiftly to mitigate the potential risks of a failed Brexit.
Deal or No Deal, Hard Impacts
In a no-deal scenario, if the UK reaches the January 31st deadline without an agreement, then the UK will trade with the EU and the rest of the world on the World Trade Organisation (WTO) terms and not the EU’s single market and customs union. It means that the UK will establish its own trade regulations, despite losing EU access and free trade.
Essentially, several businesses are uncertain and do not understand what looms after Brexit, and speculations in light of potential political turmoil with the EU and relentless skepticism have slowed down investment.
More substantial impacts, however, can be predicted to be felt by fresh food producers due to delays in business operations that might result in delayed production and supply.
Importers and exporters will suffer contract, cross-border checks, and financial transaction disruptions because of new regulations. How long will it take? That’s a potential question to assess in future articles should the UK government shade more light on the real impacts and implications of Brexit – Deal or No Deal.
In the meantime, UK businesses are hanging tight waiting on the forecast on whether or not a deal will be struck or Brexit will become a gloom and doom for the economy.
Investment slowdown in over three years since the referendum is a good reason for many business owners to lose sleep and hope not to make mistakes that will haunt them or be messy for their operations.
Flexibility Value
The 130-billion-pound worth of growth loss in 15 years sounds more like a “self-crucifixion” and pursuing an independent trade policy despite the checks and costs of goods at borders might have a severe impact mainly on the service sector, representing about 80% of the UK economy.
How PM Boris Johnson’s deal hopes to mitigate the risk of a market slump for over a decade is yet to be seen or clarified for businesses, and the Department of Trade and Industry has limited answers to provide because Westminster is yet to publish a clear assessment and strategic alternative for businesses.
Whatever the outcomes of the general elections, also seen as the “Brexit Election” – there’s no doubt that several businesses have already felt the impact of the referendum and feel left out without a clarification of the impact of Brexit.
New research by the British Chambers of Commerce (BCC) shows that 41% of UK firms have done no risk assessment on the impact of Brexit as the government has shared little on its assessment of the post-Brexit economic outlook.
Is the UK going to be a Second Tier Player?
Well, Donald Tusk, outgoing President of the European Council, thinks it will. However, the world economic slowdown isn’t only a Brexit issue, but a global issue that is also impacted by the US and China trade war.
The UK’s economic growth has slowed down in the past three years since the referendum but remains a growing economy even at about 0.4%.
Brexit will be a hard knock, but there’s no guarantee it would cripple the economy, and no one can predict how the UK will interact with Europe as an outside nation in the next few decades.
A desire to see an end to uncertainty has also been a strong unifying force for businesses that could create resilience – and many still don’t see any clarity on the way forward.
A lot of nations historically went through fast economic recovery via deregulation, which departing from the EU would enable, so there is even a chance the UK could outpace the EU in growth with the right deal and the proper strategies onward.
Over three years of uncertainty over future trade policy has caused many UK companies to put investment on hold and resolving the Brexit question would unquestionably produce some substantial economic relief.
According to Capital Economics, a surge in investment as deferred projects are revived would help boost growth next year by 0.5 percentage points to 1.5%.
A Saving Grace in MEASA
There has never been a better time for UK businesses to branch out and explore new territories. From rising economies to growing economies regardless of ranking, there are opportunities for UK businesses in new frontiers in the MEASA region to ease any economic risk.
It’s important to note that the fastest-growing economies aren’t in the EU, let alone North America, but in MEASA with a 3.0% to 7.9% growth outlook between 2020 and 2023, and an estimated $7.4 trillion GDP holding huge investment opportunities for UK businesses to mitigate any further risks and negative impact of Brexit, no business can go wrong in investigating a diversification strategy ahead of January 31st.
Diversification Strategy
Dubai International Financial Centre stands as the financial hub in the MEASA region, ranking 8th global financial center among leading centers such as New York, London, Hong Kong, Singapore, and Shanghai. A great strategic alternative for diversification and market entry in the MEASA region.
With emerging economies in the MEASA region, any savvy business will do its necessary due diligence on how the relationship with the UK is regarded in these countries and the benefits allocated to moving your business to a new country.
Intiomale & Company advisers help UK businesses mitigate risks associated with potential failed Brexit and moving to the UAE, the SADC region, mainly South Africa, Angola, and the Democratic Republic of Congo, and ECOWAS by helping you maintain control of your operations to increase your success and balance the risk vs reward aspect of Brexit.
Intiomale & Company has helped SMEs and Fortune 1000 with their operations and commercialization plans in some low and high-risk regions for the past 17 years as independent business development agents, strategic advisors, and growth partners in the MEASA region.
Whether you’re a UK business thinking of expanding your footprint or mitigating the risks involved with a “deal” or “no-deal” Brexit, the MEASA region offers you a better opportunity and incentives from corporate and personal income tax to capital and profits repatriation to swift corporate finance and easy investment regulations. All the tools to grow your business losing no more peace. Contact our team today to schedule your free strategy session and let us help you grow and mitigate unassessed risks.
