SIN-TRADE LTD

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The Basics

In June 2016 Great Britain voted to leave European Union. Reasons for that can be found in growing animosity towards EU and its ideas. To be honest with some of its ideas is hard to agree, so in this case it is hard to blame UK citizens that they wanted separation. Nonetheless in regards to factors that push to such decision, it was made. This means that UK government invoked Article 50 of the Treaty of European Union. Basically the procedure of leaving started.

However 'Brexit' causes now some fears in UK business world as to its uncertain final impact. Honestly it is difficult to say what will happen in 100% as this is the first time that any country leaves EU. The is hundreds of possible scenarios. Which will depend on EU standing. Let be honest no one likes when you leave them.

Business Fears

a) General Fear

I think the most common and feasible fear that lurks in mind of majority of business people are trade barriers. To be precise not only between EU but also between other countries. In regards to EU not being part of it and opting out from Single Market would mean that UK products would be subject to tariffs and other regulations that could hinder the trade.

This fear is reasonable as we have no idea what sort of relationship will exist between UK and EU. Both parties try to get the most from this situation, which is understandable, however the uncertainty fuels the doubts in business people.

New regulations could also be a problem, for instance EU Parliament can create new laws regarding products and services.

b) Trade and Labour Fear

As it was said above Brexit can cause problems in export and import (not only for UK). The reason for that is not only abandoning Single Market by UK but also hundreds of Trade Agreements. Those agreements were made by EU with other countries, UK was not signing those treaties. The common mistake that is being made is that the trade will go one like always with non-EU countries. It will not (probably), after leaving the Union, UK will have to negotiate those deals from beginning and that can take few years each. This kind of treaties are not made in couple of months but there are long negotiations and diplomacy behind it.

The problem that entrepreneurs would face is the uncertainty of the trade rules. The buyers would not be sure if there will be no tariffs for the imported goods. This would push them to look for alternative products from countries that are signatories of the treaty.

Another problem could be work force. There is no secret that workers from Eastern Europe were saving UK economy due to lack of work force. After Brexit this work force can move to other countries. The reason for that does not to be losing rights as EU citizens as UK promises that they could stay and work.

No the real reason for them to move to other country would be trade barriers. If the manufacturers have hard time to export, then they would have to lower their production. This would lead to layouts, which would lead to unemployment among EU workers. Furthermore the immigration of new workers that would be required to sustain the economic growth would be hindered after Brexit.

Ageing countries require immigrants to sustain their economic level. This can be observed in all European countries not only UK.

If we are talking about immigration, what can we say about foreign investment. This is another factor that contributes to fear. UK is very good place to start business, thanks to law and experience of tax authorities. Although if we will look closer most of the business located their activities in UK because it was their door to rest of EU. Now when this will be gone it is hard to say what will happen to existing investments. As to the new ones In my opinion there will be harder to get by British central and local authorities. Loosing the 'Door to EU' position is one of them, another would be trade.

Possible Solution for UK businesses

The most sensitive safeguarding move that UK businesses can make is to move their place of businesses to one of the EU countries. However I am an enemy of moving whole company as this is ridicules. Why loose UK law and business experience benefits. Better solution is to open a branch or daughter company in one of the EU countries.

By opening manufacturing branch or office (for services) you would be able to sell your products as EU made. This would mean Single Market benefit and being part of trade Treaties.

The most important thing is that this can be done by any size company, not only multinationals or large ones. Any one can open a businesses in EU country and still offer products and services under EU rules. Of course this can be seen difficult but this is why business consultants exists to help you with this matter.

Thanks to this you would not only be able to still benefit from EU trade rules (within EU and outside) but you would be able to gain needed workforce to sustain your business growth. As long as the product is manufactured (assembled) in EU country it will have 'EU Made' badge.

I hope that I provided some clarification in regards to most common fear that UK businesses face at the moment. Honestly speaking, this fear is not only in UK entrepreneurs minds but also those who do business with UK companies. None of us really knows what to expect.

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