There’s no doubt one of the world’s largest economies has made a splash in the business news lately. How could Great Britain’s exit from the European Union impact our business community in North America?
We look at the highlights from across the media to see what analysts and outlets are saying, and what to watch out for.
1. “How bad will Brexit get? Here’s what top economists are saying.”
From: Vox World
“On June 23, British voters decided to vote « Leave » anyway. And now they’re left to grapple with the consequences — including any economic turmoil that may follow.
“So how bad would severing ties with the EU be? On the day after the vote, markets plunged sharply around the world, suggesting serious economic risks were on the horizon. But economists have differing views on just what Brexit would mean — and exactly how dire it could get. Here’s a running roundup from around the web.”
Key takeaway: Brexit is a crisis in Britain, but there is no sure sign this is a crisis for North American business…yet. The key thing to remember is that if you’re dealing with British businesses, EU businesses that rely heavily on Britain, or if your clients are doing just that, then you should keep a close eye on what’s happening. For most businesses dealing primarily with other North American companies, Brexit may not have an immediate impact other than stirring the already-mirky waters of the psychology of business economics.
2. “‘Brexit’ in America: A Warning Shot Against Globalization”
From: The New York Times
“For all the shock and awe on Wall Street and financial markets around the globe on Friday, the imminent danger to the underlying American economy is relatively small. What’s far more worrisome is whether Britain’s decision represents an end to the economic integration and opening markets that have helped propel sales at companies like Eastman over the last few decades. …
““In the near term, you’re seeing markets being roiled, and feedback effects for the Federal Reserve,” Mr. Hubbard said. But for now, at least in the United States, “I don’t think it’s going to raise recession probabilities.” …
“When it comes to commerce, Britain is not even among the United States’ top five trading partners — it’s currently the seventh largest…”
Key takeaway: This lackadaisical stance seems to make us feel like Brexit will have little-to-no impact on American business, unless you’re like the Eastman company mentioned and have operations in both the U.S. and Britain. Instead, they cite opportunities for trade and partnerships elsewhere, potentially exposed because of the changes in the world markets. Perhaps your business can take a look across other borders for new opportunity knocking.
3. “Brexit jitters claim a Canadian IPO”
From: Globe and Mail
“The market turmoil that erupted in the aftermath of the Brexit vote has claimed a prominent Canadian casualty: MCAP Corp.’s initial public offering.
“The mortgage lender filed for a $275-million IPO in May, and institutional and retail orders soon started flowing, according to people familiar with the offering. A few days before Britain’s referendum, things came to a halt. On Wednesday, the deal was pulled altogether.”
Key takeaway: Although Brexit wasn’t the direct cause of failure, the market’s insecurity with what would amount from Brexit turmoil was enough to massively impact this business. But keep in mind, this was a huge enterprise with a muli-million dollar IPO at stake, so it’s not as relatable to most SMBs. Keep an eye on the papers for these types of stories, as enterprise analysts can give you early warning signals of what’s to come in the market.
4. “Impacts on Small Businesses And Startups In The U.S.”
From: Fast Company
« Small business owners, along with multinational companies, must understand that hundreds of laws, rules, and agreements governing everything from trade and immigration to agricultural subsidies will be rewritten, and that will impact contractual agreements, » Wojcik says. …
“Now that Brexit has happened, Todd believes slow growth here in the U.S. is likely to continue. « Paradoxically, even with all the economic and political uncertainty, if a tech entrepreneur has a good idea, it could continue to be a great time to go out and try to raise capital, » Todd contends. …
“ »The strongest of small businesses know how to withstand turbulence, adapting quickly to changing environments, » Holoubek says. « When your service or product helps larger corporations do the same, times of great uncertainty become a win-win. »”
Key takeaway: Although there are certain risks starting a cross-border business, this may be a great time to find valuable investment at lower rates. And if you’re a small business supporting a larger enterprise, you could have just stumbled into the sweet spot as SMBs can generally weather these storms very well, and that means more money in your pockets.
5. “After the Brexit Vote: The impact on US & Soviet relations”
From: Richmond Times
“As the U.S. heads into an election campaign, Washington’s influence on events in Europe and elsewhere is ebbing. President Obama went to Ottawa two weeks ago to confer with his Canadian and Mexican counterparts about coping with Brexit’s impact on the North American Free Trade Agreement (NAFTA). These leaders foresee growing opposition to free trade during the U.S. election campaign and beyond. Continued close relations on trade and commerce are important U.S. interests, but the overriding U.S. priority is the strength and cohesiveness of NATO. It was responsible for forging peace and prosperity in Europe for nearly 70 years and eventually bringing former Soviet satellites under its defense umbrella. If the EU begins to unravel under the stress of nationalist pressures, NATO’s defense shield will remain a vital U.S. interest in Europe.”
Key takeaway: Economics, politics and Russian relationships. We’ve seen over and over in reality and the movies. You better believe these discussions will be all over every news outlet, late night comedy talk show and blog, so keep watching for impacts on your business.