After British voters shocked the world by voting for the UK to exit the European Union, many wonder what will happen to businesses that opened offices in London precisely to have access to the EU’s 27-country market. There is a lot of “noise” through various media. But what does all this mean?
Although the turbulence in the markets appears to have subsided, political instability and the possibility of a UK recession loom large within the business community. The resignation of the Prime Minister, the withdrawal of Boris Johnson from the Tory leadership race and a potential legal challenge to the use of article 50 by the UK government only add to the confusion.
One fear is that those global corporations will no longer see the benefit of remaining in the UK, opting to move their operations there to mainland Europe or Dublin. The media is rife with reports that firms are looking to Paris, Dublin or Frankfurt while there have been rumors that point to that, the reality is that the corporations – shocked by the vote result just like everyone else – are only beginning to analyze their options.
“These companies used London as a base to do business in Europe. Being based in a member-country of the EU allowed them to access to move goods and services freely through 27 markets,” says Peter Villani, President of the BQBC. “But now those companies may, until a new trade arrangement is entered into face new borders and tariffs if they want access to the EU. This does create a lot of uncertainty.” In addition, the loss of freedom of movement for EU citizens to the UK may disrupt certain key sectors of the economy in the UK.
Finally, what of the future of the Comprehensive Economic and Trade Agreement between Canada and the EU.? Will the exiting of the UK from the EU speed up or slow down its ratification by the remaining EU Member States? Will the UK push for a free-trade agreement with Canada?
However, Villani adds, “ Its early days, the situation is still very fluid, the requisite notice under Article 50 of the Treaty on European Union has not been sent by the UK government, the UK still has a long way to go to actually extricate itself from the EU ” says Mr. Villani, adding that it could take more than two years for a separation to happen.
The BQBC is committed to promoting trade and commerce between Quebec and the UK and it will ensure that its members are informed as to developments in a coherent and unbiased fashion.