We may not have triggered Article 50 of the Lisbon Treaty yet, but UK businesses are already feeling the impact of Brexit. We’ve witnessed a hike in the price of materials and fuels purchased by UK manufacturers, up by 7.6 per cent according to figures from the Office for National Statistics (ONS).
In a survey by Hitachi Capital, conducted by YouGov and the Centre for Economic and Buyout Research, over £65.5bn of investments were put on hold by a third of UK businesses following the referendum. There are many negative stories hitting the headlines – but has the impact of Brexit really been that bad?
Experts predicted post-Brexit UK economic growth would slow from 0.7 per cent to 0.3 per cent in the previous quarter. In reality, it was a different story, with the economy growing 0.5 per cent in the three months following Britain’s Brexit decision. Although that growth has slowed, the impact of Brexit hadn’t been as bad as predictions anticipated.
So, if it isn’t entirely negative, what opportunities does it offer for UK businesses? Firstly, it offers the chance to move production in-house. Manufacturing slowed by one per cent in the wake of Brexit, as a result of the weak pound. By moving the production of core materials in-house, businesses can eliminate the rising costs associated with buying from overseas suppliers – a move that will likely place them in a stronger position post-Brexit. Of course, this is a huge decision and investment that may not be possible for all businesses.
Many believe our lack of experienced STEM workers will further increase the impact of Brexit. However, rather than perceiving this as a negative, it offers the opportunity for businesses to develop the next wave of skilled workers, offering new training opportunities. Likewise, businesses can improve offered benefits to help attract the brightest industry talent.
Brexit may make bosses tighten their purse strings, but can this benefit Britain’s businesses? In a world of rising costs, maximising product margins depends on making internal business processes more efficient. Reviewing and stripping back processes could present the country’s businesses with new ways of working that may not have been considered pre-Brexit.
But how would the above work in practice? High voltage coil manufacturer, Houghton International, has recently made similar investments to those mentioned above. Rather than standing still in the wake of Brexit, the company has continued to grow, hiring ten staff members and investing over £300,000 in plants and machinery in 2016. The move is helping to further improve the company’s service offering to better performance and meet demand.
CEO of Houghton International, Michael Mitten, said of Brexit: “Regardless of the UK’s position in the EU, Houghton International is, and will continue to be, open for business internationally. Nothing has changed yet and it’s unlikely that it will for at least a few years – at the moment it is very much business as usual for us.
“However, as the Prime Minister has very clearly stated, Brexit means Brexit and we are fully preparing for this to happen. As a medium-sized, privately owned business, we are small and agile enough to react to any changes as we need to and develop new ways of working as required. We see Brexit primarily as an opportunity to improve business with our customers in the EU and around the globe. We remain fully committed to the export element of our business.”