Is Brexit Still Affecting Business in the UK?

Since June 23, 2016, people have slowly adjusted to the coming change and when Britain finally completed the transition away from the European Union (EU) on 31 December, 2020.

However, it is a new normal – and there is no denying Brexit is still a bitter pill to swallow for nearly half the population who voted to remain within the EU.

Brexit’s Impact On Business

In this business blog, we consider the ongoing impact on business in the UK and how Brexit is challenging work, staff hire, investment and immigration.

Brexit continues to have a significant impact on the economy in the UK, and we’ll also take a look at where adverse effects are been felt. Before we get to this, let’s look at some of the other ways in which Brexit is still affecting businesses, including:

• Staff acquisition
• Funding and investment
• Immigration

Staff hire

Since the end of the Brexit transition period on December 31, 2020, businesses in the UK have had to navigate a new points-based immigration system.

Any change takes time to adapt. However, this particular one has made it more challenging for employers to recruit staff from overseas. Offshore workers must now meet specific requirements, such as speaking English and having a job offer from an approved sponsor.

The new points-based system led to concerns about skills shortages, particularly in industries such as hospitality and healthcare, which rely heavily on workers from overseas.

Funding and investment

Brexit has led to uncertainty about the future of the UK’s relationship with the EU. Unfortunately, some businesses and entrepreneurs have hesitated to invest in the country.

For example, the hesitation to invest has been particularly pronounced in industries such as finance, where the loss of passporting rights has made it more difficult for UK-based firms to do business in the EU.

However, on the flip side, other sectors, such as technology, have seen increased investment since Brexit as investors look for opportunities outside of the EU.

Immigration

The changes to the immigration system have also impacted businesses that rely on low-skilled workers.

The UK government has introduced a new seasonal workers scheme for agricultural workers, but this has been criticized for being too limited in scope.

It is hard to please everyone, and as such, even with the seasonal worker scheme, there are concerns that Brexit will continue to contribute to labour shortages and higher costs for businesses that rely on low-skilled workers.

Damage To UK Economy

The UK’s decision to leave the European Union (EU) in 2016, known as Brexit, has significantly impacted the country’s economy. Still, it is challenging to quantify precisely the damage caused by Brexit.

There have been several adverse economic effects of Brexit, including:

• Disruption to trade
• Uncertainty and fear
• Loss of access to EU single market
• Damage to financial services
• Lower migration

Trade disruptions

Brexit has disrupted trade between the UK and the EU, with additional customs and regulatory barriers causing delays and increased business costs. This has led to decreased trade flows and reduced foreign investment.

Uncertainty

The prolonged Brexit negotiations and the lack of clarity around the UK’s future relationship with the EU have created uncertainty for businesses and investors, reducing investment and hiring.

Reduced access to EU markets

As a result of Brexit, the UK has lost access to the EU’s single market and customs union, which has reduced its ability to sell goods and services to the EU.

Financial services

The UK’s financial services sector has been particularly affected by Brexit, with many firms relocating staff and operations to other EU countries to maintain access to the single market.

Reduced immigration

Brexit has reduced the number of EU nationals coming to the UK to work, which has created labour shortages in some industries and affected the country’s economic growth.

Summing Up

Undoubtedly, Brexit has been and continues to be challenging to businesses. It’s hard to estimate precisely the economic damage caused by Brexit.

Many economists agree that it has had a negative impact on the UK economy, with some estimates suggesting that it has reduced GDP by up to 2% in the long term. Unfortunately, the full effects of Brexit on the UK’s economy may not be apparent for several years.

The impact of Brexit on businesses in the UK will be ongoing, but startups are already adapting to the new environment, and other businesses will eventually come right too.