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Most and Least Affected Industries following BREXIT
by Startacus Admin
Chris Conway is the MD of Accounts and Legal a leading Small Business Accountancy firm based in London. Here he considers the Most and Least Affected Industries following BREXIT and the sectors that could benefit from Brexit..
How could Brexit affect your business?
The results are in and it has been decided that the UK will leave the European Union, but how will this hit the way you run your business and the sector you work in?
Businesses are braced for the economic fallout due to the uncertainty caused by a so called Brexit.
No-one knows how an exit from the EU can work. The only country to have left the EU was Greenland in 1985, but the UK is a bigger economy. There are plenty of questions over future trade deals, access to the single market and the position of EU migrants currently in the UK.
Financial services accounts for around 12 per cent of UK GDP.
London is renowned as a global financial centre with many companies choosing to list on the London Stock Exchange and base themselves in the capital due to a shared language as well as access to the rest of the world and to other sectors such as law and accountancy.
Many EU related financial activities take place in London such as the clearing of trades in euros, so there is a chance this could relocate to the continent.
International banks may begin to question whether it is worth being in London where rules could be different to what is already established in the EU.
This could hit jobs in the City as well as the ability of banks to lend to small businesses and homeowners as there could be less capital around if confidence in the UK banking system falls.
However, there is always a chance that banks are allowed to passport their services into the EU and into the UK, depending on how the exit negotiations are handled, which could mean business as usual.
Some parts of the UK services sector such as housekeeping, cleaning or restaurants relies on migrant workers. Much of the work is seasonal and lower paid so more suited to someone who may be travelling around.
This has also kept wages low but if firms need to fill jobs with British workers due to there being fewer migrants, salaries may have to increase.
Paying people more isn’t a bad thing but it ends up costing businesses more money that they have to find from somewhere.
If the UK falls into recession, as some predict, consumers could tighten their belts and put off purchases. One area that could see a big impact is house prices, which typically fall in a recession. This risks homeowners falling into negative equity and they may get far less back on their property when they come to sell.
There could also be fewer buyers on the market hitting developments and estate agents.
Foxtons has already issued a profit warning following the results.
Travel and leisure
If the economy drops then wage growth could also stall. This means people will have less money in their pockets that could typically be spent on leisure activities.
So if you run a travel company there could be fewer holidaymakers.
Whisky drinkers may also be hit. The Scotch Whisky Association says the industry is worth £4billion a year and employs around 400,000 people. Many of its products are purchased abroad so it relies on free trade agreements to export into the EU and the rest of the world. Many of the free trade deals are negotiated by the EU with emerging markets. If tariffs were introduced the sector could soon turn sour.
Around 11.8 per cent of UK exports to the EU are from car manufacturers. Car manufacturers, while foreign owned such as Toyota and Jaguar, still build their models in the UK.
Although there is an argument that the weaker pound could help international sales of British made cars, but it would depend how much the tariffs were to export them.
Many warned against a vote to leave as it could become more expensive to make vehicles as parts may be pricier due to the exchange rate and any tariffs introduced could make it harder for exports.
This hits anyone from direct employees to those smaller businesses supplying vehicle parts.
It directly employs some 160,000 people in manufacturing and a further 799,000 across the wider sector.
Mining and metals make an important contribution to the UK economy. But most of their activity takes place outside of Europe in emerging markets and Africa. So if you work within these sectors Brexit may not affect you, although there are plenty of other issues hitting the sector such as rising costs.
Smoking is still a popular pastime in the UK and most companies based here are from America so there is very little likelihood of this sector being extinguished. The government is also reliant on taxes from this sector so will be relieved.
Media and telecoms
People will continue to watch films and make phone calls.
Many media companies are international brands and are more likely to sell into American or other English speaking nations.
Mobile companies such as Vodafone are global companies so are likely to be diversified across different regions so could take an economic hit.