There are many uncertainties surrounding Brexit, and they have not lessened in the days post referendum. The political power vacuum in the UK, internal party disputes and speculation about the reaction(s) of the EU are adding to the uncertainties about the Brexit plan.
For Swiss exporters, Britain's exit from the EU is yet another element of uncertainty in an already very unstable world economy, the growth development of which is continually influenced by new trouble spots.
And this element of uncertainty carries weight. The United Kingdom is, after all, the world's sixth most important export market for Switzerland (volume: CHF 13.1 billion / excluding precious metals). An export market which, in recent years in particular, gained in importance thanks to robust economic growth and a relatively strong pound.
Pound at an all-time low
The GB-CHF exchange rate is now not in great shape post Brexit. The British pound has fallen significantly against the Swiss franc. In other words: British buying power has decreased and price sensitivity has increased accordingly. This is likely to be reflected negatively in consumption and in the willingness to invest. However, there are also advantages. First of all for companies in Britain who produce for export.
According to one survey, 40% of Swiss companies assume that Brexit will have a negative impact on business with the UK, however the majority (55%) are expecting minimal or no setbacks in their activities across the channel.
Even when the impacts of Brexit are still difficult to calculate, Swiss export businesses can of course already arm themselves against any risks with preventive measures. The Swiss Business Hub UK, for example, recommends:
taking a close look at the currency risks CHF-GBP in the company and continuously reviewing them (the pound fell to a historic low in July)
seeking out contact and communication with the customer and suppliers in the UK, and deepening it wherever possible and necessary
analyzing the risks which business customers in the UK are faced with because of Brexit in order to be prepared, for instance, for any reduction in orders
checking the value chain, incorporating the UK, for any weak spots
checking existing legal and contractual ties in the UK and adapting existing modalities where necessary
taking into account any additional costs and more administrative outlay because of stricter border controls, new regulations and formalities and re-introduced levies (e.g. customs tariffs)
for the future taking into acoount more administrative costs for the recruitment of personnel and sending employees to the UK
keeping a proper eye on the fiscal landscape.
Which industries and sectors in the UK are most strongly affected by Brexit is not yet known. What is known, however, is that before the referendum, it was primarily life sciences, automotive and aerospace that agitated for remaining in the EU. There is likely to be good reason for this.
Some other questions on the impact of Brexit can only be answered insufficiently or not at all. The speculation will continue for some time. It could be at least two years before the negotiations for the UK to leave the EU are concluded. Two years, therefore, in which the status quo will remain, at least with regard to the contractual and legal relationship to the EU. The uncertainty about the future remains. And this will continue to be the case until the UK has re-built and contractually settled its relationship with the EU (and Switzerland).