Blog Spot

get book

What our Clients say about ICON...

Quote from Jackie Fisher - The reason we started working with Icon was that I felt we had a good company but I didn’t know how to take it next level quickly…Tony Golley was the first consultant who actually asked me what I wanted, and really listened, what a refreshing change...

Brexit: – Who Will Be The Winners and Losers

By Tony Miles on 11/07/2016 - 0 Comments

The full consequences of Britain’s vote to leave the European Union will take years to sort out, and in the meantime growing uncertainly may come to haunt British business. Prior to the vote on Brexit many business owners reported that new orders were put on hold and since then many are also stating that the pause button on business has been well and truly pushed.

Several big corporate investment projects are now being delayed in the wake of the vote. A vote on the new Heathrow runway has also been delayed, as has the decision on the high speed rail line to the north of England, and the new nuclear power station at Hinkely Point. There are also signs that the property sector has slowed. In these uncertain times it is important to understand how Brexit may impact business, as there are significant challenges ahead. However, for those that plan carefully, there may be significant opportunities.

One thing is for certain, and that is movement of the pound in the currency exchange markets will impact British Business. Those businesses buying imported commodities / materials purchased in dollars or Euros will face higher exchange rate costs and these movements are likely to be around until the political impact of Brexit is known. When the UK government makes the negotiated terms of Brexit clear, then markets can determine a value for the pound vis a vis the Dollar and Euro. Until then investor and consumer confidence will continue to take a tumble. 

However, short term movements will drive opportunities. The pound did surge to around $1.20 on 11th July on reports that Conservative candidate Andrea Leadsom is due to drop out of the race to be Prime Minister. This will leave Theresa May as the sole candidate for the top job, easing some of the current uncertainty rattling markets. Unfortunately, this improvement in the pound is likely to be short-lived, if the Bank of England announces it is reducing the bank base rate from its 321 year low of 0.5% to around 0.25%.

The city is nervous about the future and this is evident in the value of the FTSE 250, which is made up of smaller companies that mainly generate their revenues in the UK. By 10th. July values were down around 10%. The contagion of consumer and investor is likely to spread throughout all European markets if Italy is unable to shore up its ailing banks.

In such circumstances, who are the beneficiaries of the lower value of the pound – who are the winners and losers? Certainly British exporters should see an increase in sales as their products become even more competitive on the global market place. Markets such as the USA and the Commonwealth countries present significant opportunities.  Opportunities may arise in specific markets - a key industry sector moving forward may be the hospitality sector as it will be cheaper for foreign tourists to come to the UK.

However, limitations will be placed on development of our export markets due to the difficult economic circumstances faced by many global markets. Retailers will also face a tough year ahead, made worse because of Brexit. Weakening consumer confidence is likely to hit sales, and many economists report this is likely to push the UK into a recession.

What can companies do to mitigate against any potential impact of these uncertain times. Companies that ICON are already dealing with are working on strategies to maintain and improve competiveness.  This includes reviewing costs and sourcing from new markets in order to reduce cost of goods. Some are looking at developing new products to serve existing or new markets.

One such example is a removals based company based in London that is looking to develop a commercial refurbishment business and has already secured their first significant order within 4 weeks of launch.

One critical element is to get teams focussed and motivated toward working on an overall plan. Failure to harness the potential of the team resource may hamper competitiveness which could be the final straw in the survival plan for some businesses. 

Achieving sustainable, profitable growth over the coming few years is going to be a real challenge and it will be important for companies to develop a plan of attack. Reviewing challenges and putting in place strategies to capitalise upon and exploit opportunities will now become essential. Whilst no one can accurately predict the full range of consequences of Brexit, one thing is certain - the next few months (and possibly years) will herald challenging times.

It is likely that during this period the ‘strong’ will survive. Being strong will mean that companies must have a competitive edge and clear customer proposition, backed up by a competitive and lean operational structure and team that consistently delivers a quality product or service.

Is it time to review what you do?

There are 0 comments for this entry. Leave your comment below >>

Leave a comment on this article >>

Latest News and Articles

27/03/2018 -
GDPR – why it is (and isn’t) scary We have all heard about the European General Data Protection Regulation (GDPR), and all the massive fines... Read More