Trading with the UK after Brexit
The UK’s narrow vote to leave the European Union on June 23 2016 painted a particularly dark picture of worldwide economic uncertainty. The world watched as the pound instantaneously plummeted to its lowest in 31 years, and though we have since seen an initial recovery, analysts argue that the markets remain fragile and the future of the wider economy remains unclear.
So how will trading with the UK after Brexit affect businesses in the USA? Is it a dangerous time to invest in the UK economy?
The immediate reaction to the vote results in foreign exchange markets was not positive for the UK economy, and it undoubtedly affects USA-UK trade relations, since the UK has been a staging post for European trade from the US for decades.
Businesses in the USA are understandably cautious, however, it is important to consider the potential opportunities for those businesses that spend money in Britain and may be able to benefit from low-cost investment in the UK. With such dramatic changes to the value of the pound, companies that buy services, goods or components in the UK will see an extension to their recent discounts for a while to come. USA Businesses providing services to UK businesses will also benefit as UK goods become more competitive and they sell more here in the USA. By acting now, companies could to steal a march on their competitors, who are shying away from any investment or trading with the UK after Brexit, cautious of the current market conditions.
In the longer term, it is suspected that the UK will be offered an undesirable EU deal, setting an example to the remaining EU members to avoid them following in the footsteps of the UK. This has the potential to open up new trading avenues via the USA, whose businesses will likely benefit from good deals on UK to USA imports. Political figures in the USA are already discussing the possibility of the USA-UK trade agreement, and though it may be a minimum of two years before we see any negotiations, our common language and ‘special relationship’ will hopefully offer some positive reassurance in a life after Brexit.