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Brexit – Challenge & Opportunity

The opportunities created by Brexit are often overlooked due to the view that Brexit poses unprecedented and extensive challenges to businesses. Whilst Brexit is indeed complicated and creates uncertainty for businesses, it also creates a window of opportunities – challenging traditional thinking and opening up new markets. 

Post Brexit, uncertainty about trade policies and their effect on trade between the UK and the EU has impacted investments in the supply chain footprint. Many organisations have delayed or postponed investments, hoping that the situation would become clearer and they could make informed decisions. With the deadline fast approaching, companies must act now to secure both supply chain and customer service levels.

PWC notes that in supply chain management, companies frequently calibrate the cost levels versus service levels in the supply chain. If transaction costs of trade become too high as a result of Brexit, companies may reconsider their current or planned locations in the UK. 

In the services sector, there is widespread discussion of the potential exodus of financial services firms from London. Irish authorities have announced that they have secured deals with more than a dozen London-based banks which are planning to move at least some of their operations to Ireland to maintain their position in the Single Market. 

In the manufacturing sector, the likelihood of business relocation away from the UK is greatest in areas dominated by multinationals. In many of the industries examined by Baker McKenzie in a recent report, there is a sizable share of non-EU overseas ownership. Such companies were likely motivated to base their operations in the UK due to the Single Market access it offered and thus may seek to relocate if that market access no longer exists. Over half of the automotive sector in the UK is owned by non-EU parent companies, while 44% of the healthcare industry is comprised of non-UK owned businesses.  

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