If one word can sum up the mood of the world in the wake of Brexit, it’s “uncertainty.” The U.K.’s vote to exit the EU has roiled global stocks, jumbled the currency markets and upended London's political scene. But what does this uncertainty mean for entrepreneurs whose livelihood depends on doing business across the pond?
Former Chancellor of the Exchequer George Osborne, who saw the U.K. through the worst of the recession, quickly took to the Wall Street Journal to assure American's business community that the U.K. would remain open for business, despite the vote. “There will be no immediate changes to our relationship with the EU,” Osborne wrote. “We now set out to build a more outward-looking, global-facing Britain with stronger links with its friends and allies around the world.”
Increased free trade outside of Europe is now apparently one of the goals of post-Brexit Britain.
“For the first time in 40 years, the U.K. will be setting its own trade terms,” Osborne continued. “So we should begin the conversation now with the U.S. and with the members of the North American Free Trade Agreement, about how we can deliver even closer economic ties.”
The U.K.’s pledge to intensify international trade, especially with North America, is good news for stateside entrepreneurs looking to make connections with Europe. But before you jump on a plane, it’s important that you understand the far-reaching implications of Brexit.
Here are four things you need to know about the aftermath of Brexit that could impact your business:
1. Flexibility is crucial.
Though entrepreneurs may find it more difficult initially to enter the EU market because of the U.K.’s diminished access, their ability to adapt and evolve will be crucial as they ride out this period of uncertainty, and try to take advantage of the changing environment.
Stay acutely aware of all possible scenarios so you can jump on opportunities. For example, airline prices have dropped drastically as a result of Brexit, and low-cost carriers (which aren’t a part of the EU’s single market) are operating between the United States and Europe at reasonable rates. This might be the perfect time to build relationships and seek out new ventures on the ground.
2. The dollar is strong.
The aftermath of the referendum result saw the value of the pound plummet, but the U.S. dollar rose 6.3 percent in a single day. So far, the United States has managed to remain steady, but further disruption is likely in the near future as the U.K. negotiates the terms of its exit. Entrepreneurs should plan carefully and hold off on expansion plans in Europe until the terrain becomes clearer.
The dollar’s new strength means that U.S. business travelers will benefit when they go abroad. And if you’re one of them, and planning to stay for an extended period, you'll likely observe property and the cost of living remaining low while Brexit gets under way. That scenario will offer an unusual opportunity to climb the London property ladder.
However, if you’re selling products overseas, you may have a harder time, initially. The dollar’s strength has made U.S. products more expensive and less attractive to foreign buyers. Depending on how smooth the exit is, the short-term volatility of the pound could become a longer-term hit on global financial markets and give your stocks a shock.
3. Immigration is up in the air.
EU citizens working in the U.K. have come face to face with Brexit’s uncertainty. Now, leaders are suggesting that EU workers already in the U.K. will be able to stay, but those wanting to emigrate post-Brexit will have to go through a new, stricter system.
Visas for non-EU workers have already become scarce because the government has been under pressure to curb rising immigration figures, but if fewer EU citizens are taking U.K. jobs, there could be more room for U.S. nationals.
4. European talent is going cheap.
Recruiting could be an area of your business that thrives, post-Brexit. With U.K. companies holding off on hiring, your company’s strong dollar could buy some top graduates from the U.K.’s high concentration of prestigious universities. Costs of accounting, legal assistance and visa applications could, for once, be worth the trouble for small businesses.
While the long-term landscape of post-Brexit Britain remains under a fog of uncertainty, signs are emerging that the U.K. will try to forge greater links beyond Europe. In the meantime, airlines are competitive, the dollar is strong and there are still plenty of reasons to hop across the pond.