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Friday, 26.04.2024, 11:45
What the Brexit vote means for foreign company in the UK and what to expect next - BDO UK
The Brexit victory sent economic shockwaves
through the global markets, UK stocks dropped more dramatically than they had
since the financial crisis and the pound fell to its lowest level since 1985.
There are tremendous levels of uncertainty and experts worry that foreign
companies will be less likely to invest in the UK and could reorient their
business elsewhere.
Even if the situation is unstable, Gatis Kaleinis, board member of Knowledgeprice.com,
emphasizes that there has generally been no change to business: “As most of our
services are exported directly to the UK, the company's revenue decreased by 10%
overnight because of the changes to the sterling exchange rate, but broadly
speaking, everything remains the same and the post-Brexit vote consequences have
only been temporary,” says Kaleinis.
“A new rankings and analysis project presented in
January 2016 at the World Economic Forum in Davos, Switzerland, named the
United Kingdom as the third best country in the world with which to do business. That the UK also took sixth place in the ‘Best
countries for business-friendly regulations 2015’ ranking is noteworthy too, so
in my opinion the role of our business in the UK hasn’t changed, even after the
decision to leave the EU. I am more than confident about the future and the
idea of leaving the UK market has never even crossed our minds,” Kaleinis says.
For the
diversity of opinion on the post-Brexit subject and the potential future for
foreign companies, we turned to one of the world’s largest accountancy networks,
BDO UK, for their point of view.
Company representative Stuart Lisle, Senior Tax Partner at BDO LLP and a member of the
firm’s National Tax Executive Board, notes: “It is more likely to be three
years before Britain leaves the EU given that there are three general elections
scheduled for next year in Holland, France and Germany. There would be little
point in May, or rather Foreign Secretary Boris Johnson, negotiating new trade
terms with the incumbent leaders in those EU countries if they might not hold
power by the end of 2017. Three years is a long time in business. There are a
lot of ifs, buts and maybes, and few clear messages coming out of government,”
Lisle says.
That said, BDO is working with clients to
scenario plan around the five possible trade models that Britain could adopt
post-exit. BDO has also just set up a Brexit-dedicated microsite for clients.
And in terms of opportunities for the firm, BDO has been approached by
international organizations overseas wishing to get a first-hand view of “what
is happening on the ground in the UK”.
“The main message is ‘don’t panic, there’s lots
of time’, but you need to have it on the agenda and have someone responsible
for keeping the board abreast of changes and developments,” Lisle says.
Potentially
Britain risks losing some of that negotiating power by leaving the EU, but it
would be free to establish its own trade agreements. The UK can build a
competitive economy outside of the EU - trade deals with other countries may be
easier to win because the UK will no longer need a consensus among 28
countries. And who knows, this freedom may have many advantages for us.
Even if the
referendum created uncertainty, the truth is that sterling has never suffered
the existential crisis that the euro has, and surely will again, so we would
like to believe that the post-Brexit turmoil in the markets and sterling exchange
rate problems will be temporary - leading to a bright economic future for our
business in Britain in the long run.