Businesses Brace for Brexit

In two months, Great Britain is scheduled to depart from the European Union, and no deal has been solidified to ensure a soft exit where trade deals can remain intact, and British businesses do not get harmed in the process. Some consider this exit better than remaining in the European Union at all, but businesses are acting more skeptical of the procedure.

On the surface, employment in Britain is higher than it has ever been, and so far, it has been hard to tell the outcome of Brexit. However, the way businesses are behaving suggests they may be more worried than initially presumed.  Banks such as Morgan Stanley are creating jobs in other European countries as a possible contingency, we still are unsure if these jobs come at the expense of British jobs. while this movement is smaller than initially predicted, the concept is still worrisome.

In terms of jobs on real terms, job growth has continued throughout the Brexit negotiation process, and it has been a boon to public sector jobs and the like. The British government has awarded £95 million in contracts and hired 20,000 new civil servants. Private sector jobs have also increased.

However, business investment has remained stagnant, and the uncertainty of the deal is only contributing to this stagnation. Businesses are holding onto existing workers and some have begun stockpiling resources in the event that a hard Brexit occurs in which tariffs could dramatically increase. In addition, companies such as Sony are moving their HQ to the Netherlands to avoid possible customs problems, and to avert future trade problems that could arise because of a poor trade deal.

A “no deal” Brexit could have huge implications for the country in an even more macroeconomic scale. This hard exit from a multinational trade agreement that could affect current trade deals with 70 different countries including South Korea, Mexico, and Canada to name a few. The key point here is that this kind of abrupt exit from the EU could affect trade deals with more than just EU member states, because some countries give the EU preferential treatment.

The impact of Brexit could ripple throughout the world in terms of trade. Increasing trade prices in Britain can cause businesses to relocate, and a poor relationship with the European Union can cause strenuous future politics between the two entities.

Sources:

https://www.bbc.com/news/business-47130189?

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https://www.bbc.com/news/business-47063405

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