Where are we with Brexit?
In the month since Brexit, we have had plenty of people asking us what the impact of this is going to be for UK business.
The simple and most common answer is, ‘We are not really all that sure!’ No-one has left the EU before and no-one really knows exactly what will happen, however we have seen a few things, have picked up on a few comments from other business owners and have a couple of ideas that we can share here.
Firstly and the biggest impact at the moment is the exchange rates. We have a number of clients who purchase from the EU and also from further afield. They are seeing the weak pound result in more expensive imports. Some businesses are choosing to delay purchasing decisions or are looking for other alternatives, whilst some others are benefitting from having a Dollar or Euro bank account and are holding funds overseas to manage the exchange rate risk.
That said, there is a similar number of client’s who are selling to the EU and are happy in the knowledge that their products are now cheaper for their customers and even happier at the continued or increased sales.
Next, property is the other area to see significant worry. Buy to let landlords are still reeling from the restriction in mortgage interest relief and are considering their options as regards keeping or selling their mortgaged properties. It therefore does not help when the news reports are that property prices are expected to fall. This is likely to have (if it is not already) an further adverse impact of these buy to let landlords as people will hold off property purchasing decisions, in the anticipation of house price falls. That said, if there were to be any falls in house prices, this is not going to be anything significant. People are unlikely to be able to hold fire and buy the same house that they are looking at this week for 50% less after Brexit! If there was any potential fall we are taking very small percentage points.
Every year for the last few years, clients have been telling us that ‘it is a funny year for business’. This year people are blaming a turbulent market, recruitment challenges, poor sales etc; on Brexit. Last year it was the Election, the year but one before it was the Olympics, the year before it was something else. The fact there are so many factors that affect purchasing decisions and following the resurgence from the ‘Credit Crunch’ peoples spending habits and business decision making processes have changed. There are so many businesses that are still operating on a knife edge and they are always looking for some explanation for the position they are in. I believe that in many cases if a business was to put their monthly sales into a graph, comparing them against the last five years, that they would see a beautiful pattern that is largely unchanged. That is what we are seeing with our client’s results. It is a funny old (business) world and we just have to knuckle down, accept the card that we have been dealt and find a way to work around it.
We are expecting to see some changes come about post Brexit, I’m sure there are plenty of areas of the VAT and other tax laws that may change, however for most people going on about their daily life, there is unlikely to be any significant impact. Especially since the Prime Minister is talking about taking it slow.
Once the markets have got used to the idea, I’m sure things will settle down with the exchange rates. In the meantime it’s business as usual.