Just over three months since Brexit, and the world is starting to see how it’s affected Britain and its economy. Some examples are too micro to overlook.
Reuters reported that a British metalworking firm, Robert Bion & Co., planned to install a three-meter robotic arm, which would speed up production. Because of the vote, the Reading-based factory froze adding of said arm.
“We’re waiting to get a clear idea of what the future might be before we make any significant investments,” owner Nick Bion told Reuters. His father founded the firm in 1964.
In March, three months before the vote, Bion said he had been close to making the order for the arm but paused on the idea because of the impending potential outcome. He said he thought it was likely the U.K. would stay in the EU. When the vote came down, Bion decided against implementing the arm as it would limit the ability to reach his market of 500 million.
While the decision to stall on plans for the robotic arm — which cost £150,000 pound ($195,000) — may seem like a small example, it’s what many analysts argue is likely to hurt the economy in the long run.
That said, analysts predicted a worse outcome. Some say the British economy has held up better than expectations. People are still shopping, employers are keeping their employees. What’s uncertain is trade relations.
As PYMNTS reported earlier this week, a new report out from KPMG said that about 75 percent of British CEOs are considering leaving their home country. Eighty-six percent of the companies surveyed, each with revenues between £100 million and £1 billion ($130 million–$1.30 billion), said they were confident about their business growth prospects, but less than 70 percent were confident about the country’s economic growth over the next few years.
As for politicians and the government side of things, Prime Minister Theresa May said she won’t start the process of Britain’s exit until 2017. In the meantime, she’s trying to balance voters’ expectations with soon-to-be foreign trade relations. But, regardless, it will take up to two years for the exit to fully negotiate.
Manufacturing and trade aren’t the only areas taking a hit. Consumer banking is also ailing, as PYMNTS reported earlier this week.
According to a new confidential industry report, the consumer side of British banking could soon find itself hard hit by Brexit.
The British Bankers’ Association put out a 117-page report strongly indicating that such commonplace areas as lending, savings and payments could all be affected as well.
Britain’s Barclaycard, for example, issues 73 percent of all cards across the EU — the effects would be far-reaching if the fees for its use at businesses and ATMs shoot up across the EU. Also problematic for London will be continued access for the single labor market, since immigration concerns were central to the Brexit debate. The BBA report — composed by the law firm Clifford Chance and Global Counsel, the advisory firm set up by the Labour grandee Lord Mandelson — has of yet not been made fully available to the public.
Deloitte also recently published a survey on financial services related to post-Brexit activities. Fifty-eight percent of 132 chief financial officers said they anticipate that Brexit will reduce their capital spending over the next few years.
Thompson Reuters’ data shows that levels of merger and acquisition activity related to British companies has also been reduced.
Reuters also cited Green Stationery Company, a family-owned company based near Bath, England. It’s also frozen plans to expand into other countries in Europe, such as Germany or Denmark.
“We are not optimistic,” Managing Director Jay Risbridger told Reuters. “We are waiting and seeing, but that’s what everybody is doing, so it’s not good for business confidence.”
The Bank of England cut interest rates to a record low, with hopes of counteracting some of these economic issues. There is hope that Finance Minister Philip Hammond will be adding tax incentives for investment to the budget announcement this November.
But with the future uncertain, many companies feel stuck and even paralyzed as to what to do, no matter their size.
“If they think you are going to leave, how likely are you going to be to get a new customer?” Bion said. “You’re in a world where you’re not quite sure what the future is.”