Brexit is still causing doubt in the States. The United Kingdom’s divorce from the European Union is estimated to take years. But the move is cause for concern at American companies which operate in the UK. Brexit is also challenging for the American government. Because it’s not easy to confront a future where a valuable ally has less European leverage. This could mean that the UK will become less recognized in global affairs.
Financial firms and carmakers were looking for spaces beyond London. However, that was before the June referendum. Now, companies are even more worried. Because they anticipate profit blows, from the decision to leave the EU.
Ford, for example, will see an impact ranging from four hundred to five hundred million dollars yearly. Bob Shanks, chief financial officer for Ford agrees.
Meanwhile, General Motors is programming shorter work hours in Germany, as it estimates demand for cars in the UK will fall.
Car companies are concerned because of the new tariffs. These could hit competitiveness of the factories in the UK. The British auto business is currently well regarded. This could soon change, as half of the exports usually go to the EU.
Tamzen Isacsson, director of a major UK industry group notes that “it’s vital for UK automotive industry that we have complete access to European markets.”
Otherwise, auto factories could find it harder to make future employments. Luckily, many businesses operate on five to eight-year plans, so the June vote is not showing impact now.
Graham Armitage, an auto analyst from KPMG believes that the uncertainty remains. If costs for exports from the UK to Europe rise by just 10 percent, some models would become unprofitable. Tens of thousands of jobs could see pay decreases or even layoffs – according to Armitage.
However, the UK auto industry still has a few tricks up its sleeve. The UK is an attractive market for exports. Germany sends around 800,000 cars per year to the UK and tariffs would be disadvantageous for both sides.
That’s why both economies have a shared interest for a deal to be struck on market access.
What’s your opinion on this article? Do you think that the vote for Brexit will affect UK’s stature in any way? Leave a comment below. Thanks.
Image Source – Wikipedia