Originally published by Bernard Marr on LinkedIn: Brexit: What Options Must Businesses Consider Now?

As the dust begins to settle from the #Brexit vote, business decision-makers seem to be left with more questions than answers. Very few people I know in business worldwide really expected this to happen, and therefore haven’t prepared for it or thought about what it might mean.

So what options and questions must we consider to prepare for the future? First, let’s look at an overview of where things stand.

The current state of affairs

While the vote was decisive, the legal path forward is less clear. Until the UK legally ceases being a member of the EU, current EU laws and regulations still stand. And the process to legally exit the EU will take some time.

How much time is currently unclear.

The UK must invoke Article 50 of the Lisbon Treaty in order to set in motion the legal process of withdrawing from the EU. From the time the Article is invoked, the UK has two years to negotiate its withdrawal.

But Prime Minister Cameron has suggested that his successor would be the best person to actually take the step of invoking Article 50, and he has said that he will step down in October (though whether or not his party will push him out before then remains to be seen). The EU doesn’t seem to want to wait, indicating that the UK and EU can stay married or get divorced, but they don’t want to remain in limbo.

Political unrest is also extremely likely, as party leaders shuffle and promises are examined in the harsh light of day. There is also likely to be a renewed push for Scottish independence, as the “remain” vote was far stronger there than in England and Wales.

Of course, this is really all speculation, as the Article 50 has only been in existence since late 2009 and has never been tested. No one really knows how the process will actually proceed.

This leaves a great deal of uncertainty, especially for business executives and decision-makers, as they try to navigate through fog.

What businesses must consider

Depending on your business and how impacted you are by international trade and the financial markets, there are a few things every business should consider:

The falling Pound

Experts estimate that before it’s all done, the value of the Pound could sink as much as 30 percent. Businesses that export their goods or import goods from elsewhere must carefully watch the value of the Pound now, and try to predict and consider the impact it will have on their business. Exporters should take advantage of the drop in the pound while the existing trade deals are still law, and before new tariffs or restrictions are put into place.

A weak Pound will mean higher prices for consumers, especially in clothing and electronics which rely heavily on imports. In addition, petrol prices are expected to rise, which will affect any business that maintains a fleet of vehicles. And, eventually, food prices could rise as well. On the upside, there is a suggestion that tourism from the US and other countries might increase if travelers decide to take advantage of the weaker Pound.

Prepare for recession

Even in the best of circumstances, the uncertainty and political turmoil that is already happening because of Brexit is likely to cause economic damage to the UK. Businesses would be wise to consider contingency plans for recession and look at strategies that may have helped them or businesses like them in the past.

Banking and finance

London’s cherished reputation as a hub for international banking and trade could be at risk. The financial markets hate uncertainty and have reacted negatively already, but as regulations are renegotiated and trade deals redrawn, the attractiveness of banking in the UK could be at risk. In addition, many multinational firms who set up in London as their EU headquarters could be looking at a move to the continent. Rumors are already circulating that Morgan Stanley is looking to move 2,000 jobs to Frankfurt (though this has since been questioned). Many analysts believe that the UK will have to water down its own financial regulations in order to stay competitive.

Labor

Financial services, tourism, and car manufacturers are likely to be the biggest losers when it comes to employment after Brexit, as well as any other sectors that rely on free movement of workers between the UK and the EU. Of course, this will all be dependent on the negotiations between the UK and EU during the exit. But businesses that rely on foreign workers would do well to plan ahead. Industries that could benefit include the service sectors, high-end manufacturing, renewable energy, and fishing.

Property and real-estate

Experts are not expecting a huge crash in property values unless there is a mass exodus of EU citizens, which seems unlikely. However, prices could freeze and investors could see rising interest rates designed to tackle inflation. The worst-case scenario would result in many negative-equity property owners and bad loans on top of an already tremulous economic situation. Business owners with investments in real estate might consider reducing their debt burden to protect against this possibility.

Research and development

The UK has been one of the main recipients of scientific funding from the EU, and the pharmaceuticals industry has become very good at subsidising their research with money from Brussels. However, without a plan from the UK to replace this funding, companies and research universities look to lose a combined £12 billion in funding, as well as open collaboration with EU universities. Companies that rely on EU grants should look immediately for other sources of funding.

These are just some of the most apparent implications from Brexit as it stands at this time. Because there’s so much we don’t know, it’s difficult to prepare. But I think smart business owners should look at the possibilities, and at least begin considering their options whether best or worst case scenarios for your situation occur. Over the past week I have worked with a number of clients on their strategy and one approach that was seen as particularly fruitful was the development of future scenarios which then allows companies to put in place early warning indicators for each, so they can start to react to shifts as soon as they become likely.

As with all my posts, I would love to hear your views. What are you most concerned about in the wake of Brexit? I’d be interested to hear your thoughts in the comments below.

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