Brexit

Brexit Tracker: JPMorgan CEO Weighs In, Employee Anxieties Grow, And UK SMEs Are Warned

Not surprisingly, everybody has an opinion when it comes to what will happen next with Brexit. In this week’s Brexit Tracker, JPMorgan Chase CEO Jamie Dimon shares his assessment, employers struggle to keep their workers’ Brexit concerns at bay and SMEs in the U.K. are issued a warning about foreign exchange rates.

Here’s a look at some of the latest Brexit-related news…

Dimon Dishes On Brexit

In his annual letter to shareholders, JPMorgan Chase CEO Jamie Dimon provided a mixed assessment of some of the larger issues impacting the U.S., pointing out the country’s strength while noting “it is clear that something is wrong” with this “exceptional country.”

Dimon’s concerns cover expansive ground. Among them is the funding of wars and debt to the tune of trillions of dollars. He singled out well-educated foreign students schooled in the U.S. being told to depart as a harbinger of pressures to come, even as corporate taxes have been, as he sees it, high enough to move businesses to seek opportunities beyond U.S. borders.

Wrote Dimon, who listed these and other problems, such activities here in the U.S. “can understandably lead to disenchantment with trade, globalization and even our free enterprise system, which for so many people seem not to have worked.”

As far as Brexit is concerned, he noted that it looms as having, upon the U.K.’s economic departure, potentially “devastating economic and political effects” tied to a “hard exit.” For JPMorgan’s own operations, some changes will be in the offing. As Bloomberg has noted, the firm has been in talks to gain presence in Ireland via an office building buy.

“We hope that the advent of Brexit would lead the EU to focus on fixing its issues — immigration, bureaucracy, the ongoing loss of sovereign rights and labor inflexibility — and thereby pulling the EU and the monetary union closer together. Our fear, however, is that it could instead result in political unrest that would force the EU to split apart,” Dimon stated.

“The unraveling of the EU and the monetary union could have devastating economic and political effects. While we are not predicting this will happen, the probabilities have certainly gone up — and we will keep a close eye on the situation in Europe over the next several years.”

Rising Employee Concerns

Many companies in the U.K. are finding themselves in a tough spot — while they are unsure of how the fallout of Brexit may not impact their businesses, they still have to ease the growing worries on their employees.

Managers are tasked with helping their employees deal with the uncertainty of Brexit even while being unsure themselves of how things will actually turn out.

According to the The Financial Times, fear and misunderstanding over the U.K.’s impeding split with the EU is already impacting U.K. business leaders.

“Highly qualified professionals have been confused, asking whether they will have to leave the country,” Punam Birly, a partner at KPMG, explained. Birly told FT that she’s been receiving many challenging questions about Brexit from the businesses she advises on employment and immigration issues.

Business leaders must are concerned about losing talent that they have brought in from across Europe, especially as the anxieties of non-British EU nationals continue to grow.

Research shows that the number of employed non-U.K. EU nationals in Britain dropped in the final quarter of 2016 to 2.2 million, a decrease of nearly 19,000 employees compared to the previous three-month period.

Locking In FX Rates

For SMEs, the risk associated with Brexit may be especially large, according to cross-border payment company Money Mover.

The firm issued a warning to small businesses to mitigate against the risk of Brexit by encouraging U.K. SMEs to lock in exchange rates for upcoming overseas payments in anticipation of volatility.

“Britain’s small businesses are facing unprecedented levels of uncertainty in light of the U.K.’s vote to leave the European Union,” Money Mover CEO Hamish Anderson explained in a statement.

“Many small British businesses make invoice payments, pay salaries and manage their treasury accounts overseas,” Anderson continued, adding that some services, like those offered by Money Mover, allow a small business to lock in an FX rate to ease the impacts of rate fluctuations.

The company cited its own research that found an SME making 12 payments a year of £50,000 (about $62,000), locking in FX rates through services like Money Mover’s, could save £17,580 (about $22,000).

Analysts have been warning SMEs about FX fluctuation since talk of Brexit began. Last year Western Union Business Solutions released new services for small businesses looking to hedge and mitigate against foreign exchange volatility. Analysis from WUBS found that the majority of SMEs weren’t actively strategizing to leverage the strength of their own local currencies.

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