Well I doubt that, but Britain’s ‘Brexit’ decision – to exit the EU – has whipped up a storm that seems to be a very long way from blowing itself out. Initial economic indicators have been surprisingly good, but longer term, uncertainty about Britain’s link with the lucrative EU market of 500 million rich consumers is likely to take its toll.
Disinvestment by Foreign Companies
The Japanese government presented Theresa May, Britain’s new Prime Minister, with a stark paper indicating the likely actions of Japanese companies in Britain, should free access to the EU market be severed. Britain is the 5th largest exporter of vehicles in the world, mainly to the EU and mainly by Japanese owned companies. The paper contained dire warnings of disinvestment.
US Banks are also looking at the viability of their London bases should free access to the EU market be lost.
House Moves are in Decline
House moves are a big indicator for the British economy, with the success of a mass of industries tied to their frequency. House prices are now declining at their fastest rate since the financial crisis of 2008. As well as new house builds; soft furnishings, decorations, carpets, kitchens and bathrooms often are all updated following a move to an existing property, plus of course financial, insurance, moving and legal services are used.
Services are forecast to decline because of Sterling’s devaluation
The fall in the value of the pound should invigorate Britain’s manufacturing sector, but the problem with that is that Britain is no longer a manufacturer of note, rather a service economy and services tend to be associated with something manufactured which more often than not is imported. For example IT services are forecast to take a big hit given the 12% drop in the value of Sterling has made IT equipment, virtually all imported, more expensive.
Both British and EU leaders still appear clueless as to what Brexit means
Adding confusion to uncertainty, while Theresa May repeats the almost meaningless mantra that Brexit means Brexit, no-one has a clue what it really means or when it’s likely to happen. The British government have barely having recruited enough staff to be able to support meaningful negotiations which are likely to be complex in the extreme in attempting to untangle 40 years of membership of the EU.
Uncertainty affects consumers
Uncertainty affects markets, but also affects consumers and businesses, many of whom are likely to delay significant purchases until the storm looks like it might abate. With at least two years of negotiating a messy divorce, the uncertainty will continue to bear down on markets, consumers and businesses across Britain and Europe.
What should I do?
So should we buy in the emergency supplies, dig a bunker and hunker down for the financial apocalypse?
Well not necessarily. One man’s misfortune always tends to be another’s opportunity and there is nearly always positivity in the gloom if you look hard enough.
To quote a really terrible cliché, when the going gets tough the tough get going……
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Gren Gale is a Project Management Consultant, author of Project Management for SMEs (and its sister edition Project Management for SMBs in North America), an expert on Project Management Software and owner of PM Results
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