Nearly two years after a very small majority of the U.K. electorate voted to leave the European Union, much of the world remains on pins and needles, waiting to see how the future U.K.-EU relationship will be structured. The global business community is particularly riveted by ‘Brexit,’ as the U.K.’s departure from the EU is colloquially known. It’s a topic of great discussion and speculation, and rightly so, as Brexit will undoubtedly impact the fundamentals of the British and European economies in both the short and long term.
While the ultimate outcome of the ongoing political negotiations is not certain, one thing is clear: European supply chains will be impacted, and in a fundamental way in some sectors. It is expected that most organizations with U.K. operations will see their costs increase, for example, due to tariffs, capital costs for relocation of plants, or increasing labor costs. These rising costs in U.K. operations will negatively affect profit margins or result in price increases to customers for those companies that do not act to mitigate the risks of Brexit.