Since the historic Brexit vote on June 23, 2016, global markets have experienced volatility and the pound to dollar has depreciated more than 10%. U.S. companies that have exposure to the following factors should evaluate potential impact on their business operations:
Selling Goods or Services to the UK
- A strong dollar vs weak pound will decrease U.S. exports to the UK because the exported goods and services will become more expensive.
- Volatility of the UK economy will impact the UK/EU customers’ demand for U.S. goods and services.
Tax and Regulatory Impacts
- Post-Brexit new UK regulations will impact the UK-based operations.
- Movement of goods and services produced at UK-based operations, between UK and EU, will be subject to EU regulations.
- The UK may no longer be a gateway to the European market, so tax implication should be studied before relocating from UK to an EU member country.
The longer term political and economic consequences of Brexit are still uncertain because there will be lengthy negotiations between the UK and EU post exit, during the next few years, and outcomes of those negotiations are still unknown. Therefore, U.S. businesses that could be impacted by the Brexit should assess their specific risks and prepare a comprehensive contingency plan.