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Where to now for businesses in Gloucestershire?

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30 June 2016

Hazlewoods have strong roots in Gloucestershire, but support clients with a national and international reach.

Following the vote to leave the EU, we are now in a period of uncertainty and we expect to see some market volatility in the coming months.

Are you nervous?

Businesses are going to be concerned about making investments for the future and as a consequence may make reductions to capital investment in the short to medium term. They may also put a hold on recruitment until there is more certainty around international trade agreements and regulatory frameworks.

One thing is certain, you can bet your bottom dollar that if they did not have a Brexit contingency plan, they will be working on one now.

Locally, for businesses we work with, those individuals who voted to leave were concerned with the lack of accountability in Brussels and the desire of the EU to form further and deeper political union.

What’s next?

A leading constitutional lawyer has recently stated that the referendum is advisory only and that our MPs will have to vote on the final decision.

Given the small margin of victory by the leave campaign, the revised deal with Europe – whatever that may be – will leave many in the leave camp disappointed. There will need to be a cross-party consensus regarding our future relationship long before we invoke Article 50 of the Lisbon Treaty.

This will most likely mean the continued free movement of trade and people within the EU. The Chancellor has declared that we are in a position of strength and ready for business.

A positive outlook

At the time of writing the sterling to euro exchange rate is at 1.20 euros to the pound. The sterling/dollar exchange rate is 1.32 US dollars to the pound.

These exchange rates make our exports far more competitive, so many of our country’s businesses will see this as positive.

This could also lead to further reshoring of manufacturing back to the UK. It is worthwhile noting that Germany has been the largest beneficiary of the EU project and the euro – in particular, it has led to a massive devaluation of their currency meaning their exports are far more competitive than they would have been outside the EU.

Investment may be delayed and recruitment frozen for a while, but the impact should be temporary. Companies trade with companies and people, and for the majority of trade it is not with governments.

We must remember that we are the fifth largest economy in the world and that compared to most of the EU our economy is in an exceptional position.

The German and French equivalents of our Confederation of British Industry are unlikely to allow their governments to introduce significant barriers to free trade with the world’s fifth largest economy. We import far more than we export and if tariffs are imposed, there will simply be reciprocal arrangements.

Some financial services and banking jobs (in particular, currency trading desks) will be looking at relocating to Dublin over the next few months as part of those sectors’ Brexit planning.

In Gloucestershire, we don’t tend to feel the booms or busts quite as much as the City, so a prediction for Gloucestershire’s companies is one of continued steady growth.

Next year’s list would be expected to show further growth despite all the uncertainty, where a weaker sterling may well offset some of the other factors that may curtail growth.

Hazlewoods is part of an international network called HLB International, which is one of largest accounting networks with over 100 global practices. This involvement allows Hazlewoods to give country specific support, whether we are in or out of the EU.