How to protect your business against a Brexit

The prospect of a referendum on leaving the EU is already unsettling the markets, with investments deferred and volatility on the rise.

by Alexander Garrett
Last Updated: 26 Apr 2016

What should you be doing to get ready for the possibility of waving farewell to Brussels?

Don't panic - yet. The Conservatives are committed to holding a referendum in 2017. It is estimated secession would take two years and the repeal of EU legislation from UK law might require an extra year, taking us to 2020. However, some effects - particularly on financial markets - are sure to be felt sooner.

Start lobbying. Whether you want to leave or stay, get your voice heard in the media and consider joining a campaign group. 'Businesses should take a sober, fact-based approach to speaking out, citing the impact on employment,' says Lucy Thomas, campaign director of pro-membership Business for New Europe.

Brace yourselves. Brexit is likely to have a significant effect on the economy, which could mean a fair wind or a nasty recession, according to your viewpoint. Iain Mansfield, essay winner of the Institute of Economic Affairs Brexit Prize, estimated that a worst-case scenario would lead to a 2.6% decline in GDP, while the best case would give a 1.1% rise. His 'most likely' scenario implied a 0.1% gain.

Think finance. Maybe now's a good time to move your overdraft to a UK bank and sound out your investors. Other funding may also be at risk. 'Many businesses in the science and technology sectors receive EU research funding,' says Thomas, while in poorer regions Local Enterprise Partnerships feed EU money to small business through loans and grants.

Get an office in Dublin. City banks have already been looking at relocating within the EU, with the Irish capital the favoured destination. The need to do so would depend upon the exact form Brexit took. If we remained part of the European Economic Area (EEA) we would retain complete access to the Single Market, whereas other options such as signing up to the European Free Trade Agreement (Efta) would grant partial access.

Think new markets. If your trade with EU nations is endangered, now's the time to look at other markets, not just in the Commonwealth but also high-growth countries such as China and India. 'We will be able to make free trade agreements with all those countries, so it makes sense to explore new opportunities,' says Rory Broomfield, director of the pro-Brexit Better Off Out campaign.

Flex up. The main business rationale for leaving the EU would be to get rid of regulations on employment and other issues, so there would likely be a bonfire of red tape after a 'yes' vote. 'Many small and medium-sized business will be able to take advantage of looser regulation designed for the UK market,' says Broomfield.

DO SAY:

'We will evaluate the risks and opportunities and decide what is best for our stakeholders'

DON'T SAY:

'I thought Scotland had already voted on the referendum'

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