While the £ is low, it should be true if you sell anywhere but UK.
As long as the value of the £ says down, the Chinese stuff has become more expensive and your stuff has become more attractive.
Yes, the UK will have to pay higher prices for many things over the next few months, and we will start buying more food from UK farmers etc., things will change but change can be good.
Okay I see where you are coming from but sadly it doesn't work like that.
Firstly, as
@jokiin has stated the next production runs/orders etc I'm crucified. Not literally but financially.
You're also assuming my prices stay the same - how can they? I've lost about 15-18% just gone. I sadly have to afford to eat and a roof over my head. Lets even say I can offset this by the extra orders...problem is then I need better infrastructure and my costs rise...I lose regardless. Yeah you're right currently there's a tiny equilibrium but that'll go within about a week or two.
I don't think you understand the gravitas of the decision, it seems like you are looking at it from a very simplistic view. Read below...again this is me just highlighting stuff, not arguing or being aggressive merely just showing what it's like for me as a small business.
@JooVuu
...yeah, because it actually is the resonable thing to do: not panicking and thinking about what to do next, what (new) options and opportunities opened themselfes...
Again you're missing the point, how can I not panic when I have lost that much profit?
If you boil it down, main issue on hand:
except those stock-exchange-panics nothing happend till today. GB is still a member of the EU (until one applys Chapt.50).
Stock-Exchange (including the pound) already recoverd.
The pound has had fluctuations before, so that shouldn't have been a surprise...
Usually I would attempt to be more diplomatic but on this I can't - this argument with anyone who studied the EU and knows anything basic about the markets will tell you - is so simplistic it's painful.
Yes we are still a member of the EU. However, it stops there. Markets work on certainty, and what we have is a very very very uncertain situation. Even us being a member of the EU isn't certain - when will Article 50 be invoked? We 'know' not till a new PM is in place. That could be September. Theresa May the frontrunner has said she wouldn't invoke it for a while...but when? The markets have no idea. As such they are SO volatile who would want their money in the UK?
Now before you say, it's good for foreign investors, yes it is in the short term. They buy low, build the price up, sell. After all, who knows what is going to happen to the UK market/economy and as such why risk it.
The UK was very attractive for foreign currency due to our credit rating, low tax levels, and a very blind eye to sweetheart tax deals. We also gave companies access to the EU market. As such the GBP was seen as a good safe bet, but now not so much...we may have low tax levels but if you have the same access to the EU as say Panama does...why would you go to the UK when you can get better in Panama?
Now before you say oh that won't happen - remember, market votility. As soon as Article 50 is triggered you have 2 years to get an agreement before we trade under WTO guidelines (which have tariffs etc) or all 38 national parliaments have to agree to an extension or agree the trading deal the UK has...if you want to see how difficult that is look at Canada's and Switzerland (who have technically been negotiating with the EU on their access for about 20ish years).
In real terms the FTSE 100 is down 9% when you take into account the USD strengthening. Anyway the FTSE100 is not the best indicator, as these are mainly foreign owned companies with big currency reserves the best one to look at to see how UK businesses are doing is the FTSE250...which is down about 10%. So the FTSE 100 masks it. Look at banks and property firms they have been slammed. 6 property funds have frozen assets...which have further spooked the markets. Those 6 have about 25bn GBP locked up now which investors cannot access.
The argument you made is one that is being spoused by the Brexiteers. It's simplistic, and is essentially like banging your best friends mom but saying...I used a condom so it's fine. It's meaningless and avoiding the point - ****s going to go down.
Ok, so for now, there should not be any setbacks YET*. There is still time to prepare.
*And IF there are already retailiations from EU-manufacturers/supplyers - well, good thing that GB is leaving, isn't it? Guess what they'd do to your business if they would have remained!
So let me get this straight...because we are leaving and there may be retaliations it's now a good thing we're leaving? That makes no sense in any shape or form.
I have worked with two dutch companies who have both been amazing. Genuinely fantastic and I hope to continue to work with them. Luckily my trade with the EU is small for services and as such the drop in GBP to EURO has not affected me that much but other businesses who do will have the same problems I am having.
Sure - as long the politics isn't preparing itself (and the country) for an alternative, there will be chaos; that is why now everybody should remain calm, stop panicking and think of the alternatives:
chapt. 50 needs to be negotiated; following alternatives present themselfes:
1. a "freetrade-agreement" with EU? Worked for Ukraine and Turky; regulating only questions of trade.
2. joyn the EEC without joyning the EU (as Norway and Lichtenstein did)
3. bilateral contracts with EU as Switzerland did (I wouldn't recomend that solution, as the EU strongarms Switzerland on every occasion)
4. with 1 or 3, rejoyning the EFTA, and having even MORE countries to freetrade with...
What alternatives? Let me go through yours and highlight the shortcomings and how basically the UK has not just shot itself in the foot but in the damn head.
1) Wow - you're comparing the freetrade agreement of Ukraine and Turkey with the EU? You honestly want me to shred this one apart or shall we just agree to move on seeing as you're comparing a banana to a Porsche.
2) I love this argument! It's my favorite one. So have the same kind of agreement as Norway and Lich do....so pay in an abhorent amount, have absolutely no say over anything...but get access to the market...so why did we leave? Political reasons? Well we'd still have to implement everything they said but we cannot oppose it...if we do we're out. So yeah that arguments dead in the water.
3) Dear god - stop. Let's look at Switzerlands predicament. Recently they voted not to allow any migrants into Switzerland. The EU said SURE THAT'S FINE but you don't get access to our market then. Woops. Then see point 2.
4) The EFTA is a possibility - it might be something that happens but we hold no cards. EFTA is usually for countries who want to be apart of the EU but can't (Norway (population rejects it even though forecasts said they would save money by entering it), Switzerland etc) The problem with the EFTA is that you're at their mercy...Britain is already at the mercy of the EU...they hold the cards...we hold the dice. The EU don't care if we roll it, they're the house they win regardless, the UK on the other hand could only lose a little or lose everything.
...and make the solution as "put in place" at the moment, GB finally leaves the EU.
During that, you can, as one who remained calm, prepare your company and strategy for any of those solutions, while all those panicking around "we have to rejoyn" (while not even left the EU) will be overwhelmed with what happens...
Actually this is what is going to happen - businesses will flee the UK to join the EU. Not many company's are going to 'wait' and see when a deal may or may not happen soon and stay in a market that is not stable. They'll go to the larger more profitable and more stable market 20miles to the east.
Cheers,
EDIT:
These are slightly more in-depth answers but not nearly the depth this subject and topic deserves. If anyone wants to genuinely learn more about the EU and how it works read these books:
https://www.amazon.co.uk/gp/0230249825
https://www.amazon.co.uk/gp/0199570825
