In light of the decision of the United Kingdom to exit the EU the immediate effect on your business is likely to be mainly tied up in the value of sterling and the euro. It is expected that in the period of uncertainty immediately post the referendum that there will be volatility within the exchange markets which will continue until the mechanics of separation are publicised.
The fluctuations will offer as many opportunities as difficulties to businesses and as such careful consideration should be given to the timing of transactions. Some of the issues to keep in mind are:
Pros
– Those with cash/ liquid assets may have an opportunity with a strengthened EURO against sterling to make high value purchases of property and plant and machinery assets.
– Lower raw material costs for those purchasing through the UK.
– Opportunities for contracts within the EU which the UK providers no longer have access to. These potential opportunities should be identified and sought out early.
– FDI opportunities into Ireland which were previously targeting UK for access to the EU.
Cons
– For those trading in sterling the volatility in value for the services provided is a risk this may be mitigated by:
o Maintaining a sterling bank account
o Requiring payment in EURO value
o Hedging on currency value.
– Competiveness issues with exporting into UK market while sterling weak.
It will take circa two years for the exit to complete so other than initial currency shocks, there is plenty of time for strategic planning to occur to manage the impact of Brexit. If you are concerned about the impact on your business, please do not hesitate to contact McInerney Saunders on 01-8404029.