UK Votes to Leave the EU- What This Means for Your Business
Jun 24, 2016
Following the UK’s vote yesterday to exit the European Union, we are left with a large degree of uncertainty on what will now follow. However, there are a few things we know that will and won’t happen in the aftermath of the result.
In the immediate term, we can expect some degree of currency fluctuation in Sterling and possibly other currencies, so businesses with exposure to Sterling should consider how they will manage this. There may also be some market volatility with knock-on consequences for investments and pensions and it is unclear how long this period of uncertainty will last.
However, it is important to highlight that there should be no immediate impact as negotiations for a UK exit from the European Union are likely to take a considerable amount of time. For example, pending the outcome of any negotiations there will be no introduction of tariffs and there will be no immediate introduction of a hard border between the Republic of Ireland and Northern Ireland. Free movement of people should also not be impacted in the immediate aftermath.
The UK is Ireland’s largest single trading partner in Europe and ranks second to the USA in terms of global export markets. However, the share of Irish exports (goods and services) to the UK has fallen from 55% to 17% over the last 40 years. Similarly, the dependence on the UK as a source of goods imports has fallen dramatically, with the share decreasing from 50% to 26% since 1975. The EU bloc (excluding the UK) is the largest trading partner of the Ireland, and accounts for more than twice the volume of Irish merchandise exports to the USA. Irish exporters should look to building on already strong links with US and EU markets in the months and years to come to account for any disruption to trade links with the United Kingdom.
What Can You Do?
Businesses should begin a process of assessing the impact of Britain leaving the EU on their operations and develop a contingency framework to make any necessary adjustments over the coming years as the terms of a negotiated exit become clearer or to assist us in raising matters of which negotiating teams should be made aware or seek alternative solutions. Issues to consider may include:
- Update generic contingency plans
- Analysis of business models and differences arising if trading directly, using branch structure, commissionaire structure or UK subsidiary
- Identify currency exposures
- Analysis of business lines to identify potentially exposed offerings. For example (products & services which are typically liable to customs for non-EU trading, products and services where regulatory environment may change, impacts of changes in employment laws, identify supply chain issues such as transport routes used for sales and purchases)
We suggest business engage with your local Chamber to highlight substantial areas of particular concern where we may be able to feed suggestions / commentary to the Government negotiators.
For more information on the UK Referendum result, please contact Chambers Ireland directly or see the following resources;
Please note that this information is not advice, and should not be treated as such. If you have any specific questions about any matter you should consult your legal or other professional services providers.