Posted by emmaandrews - August 16, 2016 9:32 am
‘Brexit’- What happens now?
Where are we?
Following the surprise Brexit vote to leave the European Union, the U.K. economy suffered a “dramatic downturn” in July after contracting at its fastest pace since the financial crisis, according to research firm Markit.
“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early 2009,” Chris Williamson, chief economist at Markit, said in a statement.
“The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit,’” he added.
At your service
The service sector, which drives the British economy, took a particularly hard hit, coming in at an 88 month low. This research suggests that we are heading for a recession again.
It will take approximately two years for the UK to leave the EU once Article 50 has been invoked and until we are much further along in the process of negotiating our exit from the EU; uncertainty will be a constant feature for UK businesses regardless of size.
I believe that it is a good time for businesses to take stock and try to mitigate the uncertainty. They should tighten credit control, and stick to or prepare new budgets. It may be prudent at this point in time to revisit and reconsider any decisions that will not have an immediate positive impact on profitability. The economy has taken a hit and this will ultimately mean lower economic growth in the short term. Businesses, therefore, need to make sure that their finances are as recession-proof as possible.
Opportunities to be had?
For some, ‘Brexit’ may create an opportunity. If the current immigration policy changes to a more restrictive intake of migrant workers, those possessing skills that are in high demand could see an increase in employment opportunities. However, the ‘flip-side’ to this is that for businesses requiring those skills, the cost of employing these workers could be higher. During periods of uncertainty, businesses tend to opt for flexibility and this will be good news for freelancers and contractors.
The potential positive effects of ‘Brexit’ are that interest rates have been reduced, and inflation may start to drift up as a result of the pound devaluing.
Only time will tell how this historic decision will impact on businesses in the longer term.
Characteristically, entrepreneurs tend to be opportunistic, and with change comes that opportunity. We now ‘just have to get on with it’, and plan to minimise the initial volatility whilst hoping that there will be opportunities which arise as a result of this change in the years to come.
Planning ahead
Whatever position the market is in it is always advisable to plan ahead. At McCabe Ford Williams we can help you to do this by providing a review of your business and advice on how best to develop your business to ensure that it can cope with whatever challenges it may face.
To book a free consultation call your local MFW office Ashford, Cranbrook, Dover, Herne Bay, Maidstone and Sittingbourne.
