BREXIT and It’s Aftermath
On June 23rd, Britain will vote to stay or leave in the European Union. This has more far-reaching consequences than simple sociopolitical and financial effects.
The U.K.’s Institute of Directors (IOD) polled their members, and 60% said they intended to vote to remain in the E.U., 31% said they would be voting to leave, while 9% were unsure.
I would not be surprised if they vote for leaving, as the case is strong on both sides now.
Chairs are Mindful: Scenario: If Britain Votes to Leave the E.U.
- Trade Impact 45% of U.K.’s exports are to the European Union (27 other member states). The cost of imports and Quotas automatically become significantly affected.
- Contracts & Business Models All contracts and sub-contracts of the Enterprise will need to be reassessed. This is a heartburn effort and potential impact on the financial statements.
- Foreign Direct Investment (FDI) The U.K. has traditionally been one of the biggest attractors of FDI in the E.U. Fairly competitive economy and guaranteed tariff-free access to the 27 other E.U. member states.
- Capital Markets shift towards Germany Remember, pending merger of London Stock Exchange with Deutsche Borse. February press release announcing the merger warned about BREXIT, “… although this might well affect the volume or nature of the business conducted in the different financial centers served by the combined group”.
- Two Years of Currency Fluctuations Britain would have two years to renegotiate contracts. This interim face would bring major currency fluctuations to FOREX and Capital Markets.
- Keeping E.U. Together Domino effect of other member states leaving, Greece and Spain to start with.
- Keeping the U.K. Together BREXIT would give Scotland and Wales separatists new reasons to seek independence from the United Kingdom.
Yusuf: Yusuf is the founder and CEO of Global Board Advisors Corp (GBAC), published with World Economic Forum (WEF) and CNBC Squawk Box featured on Thought Leadership. Board members of The One Less Foundation (TOLF) and Building Community Bridges (BCB). Adjunct Strategy Professor at University of Maryland’s Smith School of Business. Invited visiting Professor teaching Executive Education Professor George Town University McDonough School of Business, USA.
Harvard Business School Executive Education. B.S. Finance, MBA Management, MS Management Information Systems MIS
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