![](https://fortisconsultinglondon.co.uk/wp-content/uploads/2017/03/Brexit-signs-400-by-273.png)
David Stringer-Lamarre, Managing Director, Fortis Consulting London.
These comments are based on a lecture delivered to the University of East Anglia Economics Society. ‘Brexit, where are we now & where might we be in the future?’
Businesses in the UK are focused on being successful and appreciate that the result of the Brexit referendum has created significant uncertainty. There are a myriad of challenges ahead, but of course there will also be opportunities. The UK Government, the European Commission and the governments of the EU27 will begin their discussion and negotiations about the future relationship of the UK and the European Union. In the meantime businesses must do their best to interpret the situation, assess their own position within it and construct (flexible) strategies.
Stock markets have performed strongly since the June 23 decision, with both the FTSE 100 having gained approximately 15% and indeed the more UK focused FTSE 250 also having gained approximately 8%. Sterling has gone the other way, with EUR/GBP -10%, USD/GBP -15%, CNY/GBP -12%.
The IMF has upgraded its 2017 economic forecast for the UK, but downgraded the one for 2018.
Inflation is running at 1.9% and expected to go higher during the course of 2017.
The negotiation process will commence soon and commentators regularly provide a range of stages and outcomes. These may include, but are not limited to: a quick agreement (within the initial 2 year window), an extension to the negotiation period with an accompanying transition agreement, a ‘cliff edge’ scenario where no deal is concluded and WTO regulations come into play.
At the same time discussions will proceed with non EU nations (as well as exploring if the UK can use existing FTAs agreed by the EU).
Scenario planning for many businesses will look at future trading in goods & services with the EU. There are many challenges and these will manifest themselves differently for each business; including in which sector(s) they operate: financial services, tourism, law, manufacturing etc. Some of these challenges may be the availability of talent, equivalence of regulation, potential tariffs, non-tariff barriers & the enforcement of contracts.
There may be an opportunity to begin to trade with, or increase the level of trade with countries outside the EU. Some companies are already scenario planning and asking what they need to have in place e.g. knowledge of the market, partnership agreements/JVs, knowledge of ‘how to do business’ in ‘new markets’, logistics etc. Trading may include with the nationals & companies of these countries in the UK as well as in the non EU countries ‘overseas’.
Businesses should scenario plan as best they can for the above and the associated twists & turns that will occur as the negotiations and discussions move forward. Companies may complain that it is a moving kaleidoscope of challenges and opportunities, and much energy and resource may be wasted considering variants that may not occur. Perhaps best ‘to wait and see what happens’.
Leaving aside the duty to shareholders and stakeholders, companies that do not actively consider the implications of the Brexit negotiations may leave themselves open to threats to their continuing existence. At the same time a business that does not assess its present and future position(s) may miss out on potential opportunities.
David Stringer-Lamarre