Brexit Is Impacting Businesses Internationally

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Brexit has already begun to have adverse effects across global markets. For months before the voters in the U.K. chose self-exile from the EU, business leaders issued warnings of the potential negative impacts the separation could cause. The morning after the vote took place, June 24, 2016, the British pound dropped approximately 11 percent, bank stocks fell, and “investors preyed on companies that do most of their business in the U.K.,” according to CNNMoney.

British Airways promptly issued a warning about profits being lower than previously expected. The company does not expect any long-term impact. However, the volatile market prompted the warning.

Britain has entered an era of uncertainty as a result of the Brexit outcome. U.K. citizens and businesses are moving into an unknown future. Britain will have to renegotiate trade agreements and determine what to do with EU migrants working in Britain.

Big banks who run European facilities from London were the hardest hit. Barclays shares experienced a stock decrease of 20 percent, Lloyds Bank 21 percent, and Royal Bank of Scotland (RBS) 18 percent. Thousands of jobs could be impacted as banks have threatened to move their operations out of London. CNNMoney reported that JPMorgan Chase’s CEO, Jamie Dimon, told employees that the vote would affect the bank’s legal standing in the country, and some roles may be relocated or restructured.

Mid-sized British companies were also negatively impacted. The FTSE 250, where mid-sized companies trade stock, fell 12 percent. Morning trading in London was nine percent lower than normal. The Brexit will likely affect other industries as well. Automakers, manufacturers, and food processors in the U.K. could suffer from reduced volume and higher trade barriers. Additionally, due to increased regulatory risks, the credit ratings of airlines, telecom companies, and drug manufacturers may be affected. Consumer confidence is also expected to decline, affecting retail markets and the housing industry.

By Gichele Cocrelle
Edited by Cathy Milne

CNNMoney: Biggest losers: The ‘Brexit’ is already hitting these companies

Photo Courtesy of Jeff Djevdet’s Flickr Page – Creative Commons License