After months of negotiation and infighting, the EU and the UK have unlocked phase two of the

Article 50 Brexit process. And yet, grave uncertainty remains for both British and multinational
businesses operating in the UK, with thousands of jobs seemingly under threat and question
marks hanging over possible future tariffs and investment.

Industry bodies, consultants, economists and business leaders continue to publish reports on
the possible impact of new tariffs, and potential restriction on the movement of people.

Here’s an up-to-date roundup of what they say, and a look at how Brexit might end up
impacting the business world in 2018 and beyond.

The broader economy

In November the Bank of England raised interest rates for the first time in a decade. The last
time that happened, the iPhone was less than a week old and Gordon Brown was Prime
Minister. With wage growth set to remain stagnant, the Bank’s Governor Mark Carney
admitted that the economy may be heading for a bumpy few years, and that two further
interest rate rises would likely follow before the end of 2020.

Carney also said that the Brexit vote had already slowed the UK economy and he pointed out
that the country is now among the worst performing in the G7, having been the best
performing prior to last year’s referendum.

Business investment was also subdued in 2017. The Bank of England in November said that it
expects the level of business investment to be around 25 per cent lower by 2019 relative to its
pre-referendum forecasts, damaging our future productivity growth.

The UK economy expanded by 0.4 per cent in the third quarter of the year, official data
showed. A reading for the final quarter is due on 26 January.

Banking

Last month, professional services firm EY said that the UK is expected to have lost 10,500
finance jobs by day one of Brexit. It said that almost a third of City firms had already confirmed
moves to the continent, however it also noted that the number of jobs estimated to be moving
has dropped by 2,000 from a year ago.

Goldman Sachs in 2017 led the way as one of the most vocal banks on Brexit relocation. Chief
executive Lloyd Blankfein tweeted in October that he would be “spending a lot more time” in
Frankfurt. A French newspaper in November reported that Goldman would have two EU hubs
post-Brexit. The company currently employs around 6,000 people in London.

Citigroup, Morgan Stanley, Daiwa, Sumitomo Mitsui Financial Group and Nomura have all
already announced that they will be relocating some operations and staff from Britain to the
EU because of Brexit.

The EU dealt a major blow to the UK in November after it agreed to move the European
Banking Authority to Paris, after a dozen EU member states lobbied to host the regulator.
Technology

Brexit has raised questions over London’s status as a European tech capital and has cast
doubts over the UK’s attractiveness to investors. For financial technology firms, the biggest
Brexit-related threat might be the possibility that UK-based companies will be unable to
service continental European clients after March 2019.

Recruiting could also prove more problematic. Several pieces of research have already shown
that EU workers are less willing to come to the UK now than they were before the Brexit vote.

But there are still some major companies who appear to be endorsing London as a lasting tech
hub.

In December, Facebook opened its new London office, adding more than 800 jobs to the
capital. The social networking site said that more than half of the people working at the site in
central London will focus on engineering, making it Facebook’s biggest engineering hub
outside the US.

Car industry

Industry body the Society of Motor Manufacturers and Traders estimated last month that a no-
deal Brexit would cost the motor industry an additional £4.5bn in tariffs. It’s repeatedly
warned that a failure to establish proper trade deals after Brexit could damage the industry
“beyond repair”.

Ford warned in November that a no-deal Brexit would spell “disaster” for the UK car industry
and could cost it as much as $1bn in additional tariffs. Toyota said in September that it may be
forced to shift some UK production work elsewhere, while Aston Martin’s chief executive
called for Theresa May to provide clarity by the first quarter of 2018.

Construction and manufacturing

Like the car industry, the global nature of the construction and manufacturing sector means
that it could stands to lose a lot – especially if Brexit restricts the free movement of labour.
Seven of the construction industry’s largest trade bodies warned in November that the sector
faces a Brexit “cliff edge” if the Government doesn’t provide more details on its plans to
implement a two-year grace period for EU citizens looking to apply for settled status after the
split.

We’ve already witnessed an increase in the number of EU construction workers leaving the UK
for jobs on the continent, according to the Association for Consultancy and Engineering.
Findings by the Royal Institution of Chartered Surveyors in a report published in March showed
that almost 200,000 construction jobs could be slashed if Britain loses access to the European
single market, jeopardising billions of pounds worth of infrastructure projects.
Food and drinks

In 2017, several companies continued to quietly shrink the size of their products in a process
that has become known as ‘shrinkflation’ – where prices remain the same as portion sizes get
smaller.

Pharmaceuticals

MPs raised concerns in December about regulation of the pharmaceuticals sector post-Brexit,
warning that the UK’s departure from the EU could make Britain a less desirable place for
investment and development.

Findings by the Business, Energy and Industrial Strategy Committee, based on research from
the British Medical Association and other organisations, found that Brexit could threaten
research into new drugs. In September, researchers writing in The Lancet medical journal said
that Brexit could have a “potentially catastrophic” impact on the NHS.

In November the EU awarded the Netherlands the right to host the European Medicines
Agency, which up until now has been based in London.

Architecture and design

The UK’s architecture industry body, the Royal Institute of British Architects warned in
December that a no-deal Brexit could see EU exports slump by a third and could cut off vital
access to talent, ultimately jeopardising the UK’s position as a global architecture hub.

British firms could lose as much as £73m of export earnings alone, RIBA said.

http://www.independent.co.uk/news/business/news/brexit-economy-sterling-currency-
investment-cost-impact-business-financial-banks-insurance-retail-a7695486.html