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How Will Brexit Affect Your Business?

By CIEEM Insurance Services

The repercussions of Britain’s decision to leave the EU will undoubtedly have a lasting impact. While many of the long-term effects of Brexit are still only speculative, the more immediate repercussions are clearer.

A pall has been cast over Britain’s economy, with Goldman Sachs predicting a mild recession by early 2017. The initial signs of this forecast can already be observed in the weakened value of the pound, which fell about 12 per cent the day after the vote, bottoming out at a 30-year low. Furthermore, international investors have already begun to withdraw their support from UK businesses.

Despite Britain’s current tumultuous financial environment, SMEs should remain calm. Britain will remain a member of the EU until the negotiations for the terms of its decoupling are finalised. This process will take at least two years, meaning that UK businesses will continue to have access to more than 500 million EU customers. However, that time should additionally be spent finding alternatives to EU suppliers and customers in case Britain is unable to secure access to the single market.

Yet, even with EU trade agreements still accessible to UK businesses for the time being, higher tariffs may eventually be placed on UK imports and exports. This may then force UK SMEs to raise their prices by as much as 10 per cent, according to a survey conducted by Bidvine, a professional services marketplace. As a reaction to the inflated cost of goods, Britons may alter their spending habits and limit their impulse buys. For these reasons, your business should consider alternatives—such as participating in the online marketplace.

While the full effects of Brexit have yet to be seen, UK businesses—both large and small—must remain optimistic and focus their efforts on weathering the current economic turmoil.

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