With only 15 months left to finalise the details of the UK’s withdrawal from the European Union, businesses in Britain and Europe are bracing themselves . After all of the promises from the leave camp and warnings from ‘remainers’, can Brexit be economically beneficial for the UK? In this post, we weigh up the pros and cons .
#1 – Companies may have fewer regulations
Brexit could present an opportunity for businesses in the UK to operate without European Union (EU) directives. Once the UK has left the EU, it no longer has to adhere to rules imposed by the European Parliament and can therefore create and abolish laws as it sees fit. For instance, EU regulations prevent the UK and other member states from lowering VAT below 15%. Once Britain leaves the EU, our government would be free to reduce VAT and reduce taxes to encourage growth and investment.
#2 – A weaker pound might help British exports
Selling goods to some overseas markets may become easier . A strong British pound has often been a problem for exporters. With a weaker pound foreign investors use less currency to buy the same quantity of British goods than before .
#3 – The UK government might not contribute to the EU budget
The well documented though questionable £350 million weekly contribution to the EU budget would cease once the UK leaves the European Union. Various pro-Brexit politicians have indicated the money would be better spent on funding the NHS and attracting businesses to invest in the UK.
#1 – No access to the single market or the customs union
At present, the UK benefits considerably from tariff free trading with the EU. Upon withdrawal Britain will lose access to the EEA and will have to pay increased taxes and customs costs unless an agreement is reached with the other 27 member states. This will present huge challenges for businesses Undoubtedly they will have to pay extra costs in order to do business with organisations based in the EU our biggest overseas market.
#2 – Halt in investment
With the uncertainty generated businesses may halt investment in the UK. There are numerous reports of this already happening, with the financial centre of London perhaps hit hardest. Goldman Sachs and JP Morgan are two high-profile examples of organisations seeking to move offices from London to other destinations in within the EU.
#3 – Skills shortage
The UK is already facing a skills shortage which is bound to worsen once we actually leave the EU. Freedom of movement currently ensures that Britain can secure a skilled European national . Once the UK leaves the EU, companies will face the issue of hiring qualified employees as non-British nationals being required to obtain a visa or work permit to work, or continue working in the UK.
Weighing it all up
Weighing up the pros and cons of Brexit, the Blackstone Team believed the benefits of staying in the EU, far outweighed those of leaving. Whilst it may be attractive to legislate autonomously from the EU, being able to trade within the EU free of tariffs is a huge thing to sacrifice – especially with the EU being the largest trading bloc in the world.. The referendum decided differently. Our job now is to provide our clients with options that minimise risk.
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