Regardless of which way you voted last year, and what you feel about the result and the current political situation, if you are in business you can’t fail to have noticed the impact that Brexit is having on international business.
Millions of words have already been written trying to predict the impact of Brexit and almost always they come down on one side or another depending on the political standpoint of the writer making them next to useless as a means of making business decisions.
The idea of this article is not to predict or to score political points by way of unsubstantiated predictions, instead we hope to relate the “real world” impact of the Brexit vote as we are feeling it right now in our business and as related to us by our many clients who are all involved in selling globally.
So what’s the impact of Brexit been on our business? As you might already assume, the impact has been both good and bad. Let’s start with the good stuff…
In the run up to the vote there was a marked increase in the translations we were carrying out for Nordic countries, most notably Norway. This was due we believe to the fact that many commentators were using the Norwegian economy as a benchmark for what the UK might look like outside the EU. Although Norway is not a member state of the European Union (EU), it is a member of the European Economic Area (EEA) so Norway has the benefit of free trade with Europe but without the political control. The very fact that Norway was being examined meant that many UK and global clients suddenly became aware of the potential of Norway as a market, and as a result our translation enquiries went through the roof. It’s interesting to note that although the enquiry rate has slowed back down this year, we are still seeing more Nordic languages proportionate to others in our regular workload.
The other immediate impact of the vote in June 2016 was on exchange rates which had a marked knock on effect for our business. Our UK based clients found themselves well placed to export with a cheap pound, and they made hay while the sun shone, in some instances doubling or more the volume of trade they did with the Eurozone. Our business relies on international trade, so a boost to orders from overseas for our clients means inevitably that they need us to do more translations for them, so as you might expect the volume of work we did increased, but the weak pound hit our margins hard since we pay the majority of our translators in Euros or US dollars. More recently the pound has rallied somewhat and that has helped margins to recover, but it’s not all good news.
Brexit caution is impacting on trade
It’s been a noticeable trend in the last six months that many of our regular clients have become cautious about their post Brexit futures – let’s face it, this is entirely understandable. When decisions regarding substantial new investment are involved, having no clarity on the future state of international trade makes it almost impossible to make an accurate forecast, and in the absence of information – managers are simply putting off making investment decisions.
We can see this in a growing trend of delays in major projects with any kind of international element. While some of these delays are only a few months while financiers get comfortable with lending decisions, some projects for which we’ve quoted since June 2016 have been kicked well into the long grass with no sign of action on the horizon.
Now of course, translations are well down the supply chain, and it’s perhaps wrong of me as the owner and director of a translation business to make assumptions about what the impact of Brexit is for those higher up the supply chain, but we talk daily to businesses in construction, manufacturing, software development, electronics and many other sectors and they all seem to be experiencing something similar.
What’s the answer? Well some certainty wouldn’t go amiss. As business leaders we can deal with bad news if and when it comes, but the current perpetual lack of information is causing stagnation.
Clarity on what the new reality is going to be will free up the log jam of delayed decisions and while for some the impact of Brexit might mean that projects are cancelled and they have to seek a new direction, for UK business as a whole doing something is better than having to sit on our hands while our politicians on all sides seem to be more interesting in personal point scoring.
I’d love to know your own thoughts on this – please write to us and I’ll share your opinions in future articles.