While there are numerous questions that have been posed by the spectre of Brexit, some remain more pressing than others.
Perhaps the most pertinent, and practical, relates to how the UK will look to sustain itself in a post-Brexit world, particularly if it leaves the EU without a competitive deal (or any official trade agreement at all). Not only would the nation need to determine how it can add value in a dramatically changed economic landscape, for example, but it would need to carve a brand-new place for itself outside of the European Union.
With this in mind, let’s look at what the future would hold for the UK once it has finally completed the process of separating itself from the EU:
The Challenge Facing London and Small Business-Owners
To understand the challenges facing the UK further, we need look no further than the capital of London. This bustling metropolis emerged as the financial capital of Europe more than a decade ago, and since the London Olympics in 2012 the city has dominated the rankings of international business competitiveness and served as a major draw for fiscal corporations from across the globe. London’s economic growth rate has also proved disproportionate to the rest of the UK, with financial services accounting for 77.8% of this expansion and all British exports.
There is no guarantee that London will remain as Europe’s fintech or financial capital in the wake of Brexit, however, with Berlin already bidding to assume this position amid soaring levels of confidence.
If London (and by default, Britain) were to lose its status as one of the world’s leading financial hubs, however, it would need to fill the resultant void in order to maintain its GDP performance. The issue is that the UK is not a mass exporter of physical products, making it exceptionally difficult to see how this shortfall can be reversed. Similarly, small and independent businesses that do export goods will find that while they may be able to benefit from more competitive sale prices, a weakened pound will ensure that the cost of importing base materials will rise considerably.
The Bottom Line
Rising import and operational costs have already hit SMEs hard since the result of the EU referendum was announced, with WHIreland plcrevealing that independent firms ae likely to become increasingly reliant on external investment and corporate broker assistance in the near-term. This is particularly true for exporters, who will need financial and wealth management assistance if they are to import raw materials and manufacture products while also continuing to sustain a profit.
Without a vibrant financial services sector, there is no doubt that the UK would need to optimise alternative export endeavours if it is to sustain itself once a Brexit deal has been achieved. This will also create a more competitive economy that can be leveraged to negotiate independent deals with Commonwealth countries and nations across the globe, while ultimately enabling the UK to carve out a new niche as the world evolves around it.
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