Recently, the UK took the groundbreaking decision to leave the European Union. Upon this news breaking, stock markets around the world began spiralling downwards as did the value of the pound.
So how will this vote affect your business in the short term and longer term?
Upon the news breaking last week the value of the pound decreased against all the major currencies with the pound against the dollar decreasing to the lowest figure in the last 30 years. Whilst the currency market has recovered slightly against the initial drop it’s still not at the pre-Brexit level.
If you are a business that trades in foreign currency (such as US dollars or Euros) initially this will have an impact on your business.
If you sell in foreign markets this will be welcome news with your goods becoming cheaper for foreign customers. However purchasing goods in a foreign currency will now be more costly and could have a considerable impact your margins.
No More Free Market?
It will take years for the UK to fully leave the EU, however, it’s a possibility that there will be no more free trade with EU countries. This means that EU imports could attract duty which would lead to cost increases and further squeezes on profit margins.
The UK’s credit rating has been downgraded due to the uncertainty caused by Brexit. This could mean that foreign banks are less willing to lend credit to the UK.
The long-term effect of this is that banks may yet again decrease lending levels to businesses which could, in turn, impact growth and expansion plans.
How we can help
As to what the future holds for UK businesses, the effects of this decision will continue to develop over the coming weeks, months and years and we at Bright Horizon will be on-hand to offer you the necessary advice and support you’ll need.