How bad has Brexit been for business?
(CNN) – Six weeks after the UK voted for a Brexit, the bank of England is set to vote on interest rates, perhaps cutting them for the first since 2009. There have been many signs the economy is souring but are British businesses really affected?
Before the UK’s Brexit vote, businesses were buffeted by one warning after another.
George Osborne, Former British Chancellor, 4th April 2016 said, “Britain would be permanently poorer if we left the European Union.
Christine Lagarde, Director, IMF, 13th May 2016 said, “Lower output, lower growth and higher domestic prices.”
Roberto Azevedo, Director General of the World Trade Organisation, 7th June 2016 said, “Therefore damaging the competitiveness of UK companies.”
Janet Yellen, Federal Reserve Chair, 15th June 2016 said, “Consequences for economic and financial conditions in global financial markets.
Six weeks on and how bad are things really on the factory floor?
At this west London bicycle maker, Brexit may have come as a shock but it hasn’t got them into a spin.
William Butler Adams, CEO, Brompton Bikes said, “Brexit before the vote I think was sort of over exaggerated: too scared, too extreme. The impact on our business is not seismic as they read in the papers. After the net effect in reality for us is pretty positive because our bike has become more competitive.”
With about 30% of sales going to Europe, the continent is Brompton’s second biggest market after Asia but other markets are growing too. And that is what they are focused on.
William Butler Adams: “Well I’m exporting to South Korea, to Chile, to Argentina, to Mexico to Colombia, they’re not in Brexit how on earth am I managing to do that? Our largest export market is South Korea so if we can sell to countries outside of the Eurozone today, we can do it tomorrow inside Europe.”
Where it is seeing some softness is at home in the UK.
William Butler Adams: “We’ve seen a drop off in orders in the very, very short term. Because all of our customers want us to put in a price cut.”
A 10% drop in sterling has had mixed blessings. Making Brompton’s cycles cheaper abroad. However raw materials have become more expensive.
The UK economy grew by more than expected in the second quarter but other indicators haven’t been quite so positive. The country suffered its worst slide in consumer confidence in some 26 years last month and there have been other signs of retrenchment across sectors like retail, housing and manufacturing.
That’s a worrying sign for businesses like Brompton which just spent 2 million dollars on a new factory and more money developing an electric bike set to hit streets next year.
William Butler Adams: “We have main three main priorities for this fiscal year: one is the move and extract the savings, second is launch e-bike, third is develop US. Those three don’t change, those are bigger strategic imperatives for this business which are involved in our sales on a global basis. Brexit is in the second tier.”
So for now, businesses like these are biding their time and eyeing the opportunities the Brexit will bring rather than racing towards the roadblocks.