There was concern about the state of the economy before the out vote and now the future is much more uncertain. Although there will be little change immediately, it is difficult to predict what the long term implications will be and the longer that the political uncertainty continues the bigger the impact it will have on both consumer and business confidence.
Until the government decides our new trading relationship with the EU, it is difficult to know how it will affect bank lending, taxation, employment of EU nationals and inflation.
For their own political reasons the other EU members are likely to insist on the free movement of workers in return for access to the single market. This leaves an unpalatable choice of losing access to our biggest market or agreeing to the free movement of workers which would disappoint those who voted to leave.
The impact of the leave vote will be different for every organisation. Whilst the affects are likely to be greater for businesses that trade with Europe, all business owners will need to consider the likely implications. Our key considerations are:
Employment
- If you employ EU citizens, what reassurance can you give them about their employment status?
- Review employment contracts and take steps to secure any important non-UK staff as employment restrictions are likely to only apply to new recruits.
- Review recruitment procedures to check you have evidence that new recruits are eligible to work in the UK.
- If the employment of overseas workers is restricted consider how will you replace that workforce?
Sales
- Review your export exposure. What will the effect be on your business if import tariffs are imposed?
- If your business is dependent upon exports consider whether there are opportunities for acquisitions or joint ventures with EU partners.
- Review which customers or suppliers might be affected by short term volatility? You may not be dependent on exports but your customer might.
- Identify commercial opportunities in non-EU markets.
Finance
- Review sources of capital and risks around refinancing.
- Assess future funding requirements and opportunities.
- Consider what to communicate about risks to banks and other lenders.
- Review the cash flow implications of possible changes to VAT and corporate taxation.
- Assess exposure to likely interest rate and exchange rate fluctuation. Consider currency hedging if necessary.
- Review capital expenditure plans