They’re calling it the divorce of the century, and the most happening news coming out of Britain after the birth of Princess Charlotte last year. Britain has formally voted its favor to be excluded from the European Union, and though this will take months to follow through, we know the outcome now. Since the U.K. plays a huge role in world economics, the decision will leave an impacting role in every field, including business and entrepreneurs, regardless of which side you were on in the debate. Politically, the move led to David Cameron's resignation, even though he had pledged to keep running his office even voters voted against his stance on E.U. membership. But exiting from its largest trade partner will definitely cause changes for Britain. What does the change spell for entrepreneurs? Here’s what we know so far:
The pound is crashing.
Even though actually changes should have taken years to develop, the pound is already plummeting down as compared to the US dollar, especially in Asian countries: as much as 9 percent as of right now and 3 percent against the yen. Japan’s main stock market tumbled by almost 8 percent, the lowest it has been in nearly three decades. Within minutes of Friday’s results, markets across the world took a hit. The pound plunged to 31-year low while the rupee was down almost 96 paise. India’s benchmark Sensex took a big 1,058-point plunge in early trade immediately, eroding nearly Rs 4 lakh crore from the investors’ wealth held in stocks.
India's trade ability might be easier with the U.K. but more difficult with the E.U.
The U.K. is a popular base for Indian operations and sales to the rest of the world. With the U.K. out of the E.U., Indian firms will have to re-think their strategy. As much as 33 percent of Indian investment in the U.K. is in the information technology and telecom sectors. If push comes to shove and it has to migrate to the continent along with other manufacturing firms, Indian investment into the UK will be diverted to the EU, with their own set of regulations and now differential taxes.
Manufacturing and automobile industries will feel the change.
Even though the U.K. automobile manufacturing industry isn’t powerful enough to dramatically change the global automobile industry, the impact would definitely be felt. Britain’s largest car manufacturer is the Jaguar Land Rover, owned by Tata Motors. According to a Reuters reports, Tata Motors could stand to lose as much as 1 billion pounds by the end of the decade because of the split. Almost three-quarters of the cars produced in England are exported, but with the exit there could be new tariffs that could make U.K.-made cars less competitive.
The global economy could be impacted.
England’s exist jeopardizes the way we planned for the world economy to recover. The U.K. accounts for 18 percent of the European Union GDP. The block could lose as much as one-sixth of its total economic output with the exit. After the United States and France, India is also the third biggest factor, with 800 companies doing their business in the U.K. What’ll happen to their trade remains to be seen.
What is clear right now is change is evident and global businesses now will ace different regulations and increased customs. Try importing or travelling into the U.K. via Europe and it’ll be a lot more complex. However, what remains to be seen is if different means good or bad.
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