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Chartered accountants Haines Watts presents a series of articles based on its blogs. It offers analysis, reviews and comments and welcomes your feedback at hwca.com/blog


of the month Help in uncertain times


Following the referendum vote for Brexit, considerable uncertainty still lies ahead as to the prospects of Britain’s trading relationships, its regulatory environment and ultimately growth.


A recession is probable but it will be one accompanied by rising inflation following the fall in sterling, which will raise import prices in coming months. British leading indicators have been weakening for the past 18 months, despite ongoing positive headline GDP figures.


Despite the current robust labour market situation, investment tends to lead the business cycle. The uncertainty regarding future trading arrangements between the UK and its largest trading


writes Simon Garrett, partner at Haines Watts


partners, following on from several months of already weakening business sentiment, means capital expenditures are being postponed.


The UK is keen to retain decent access to the single market, primarily in order to facilitate trading in services, which make up 40% of UK exports. It is particularly concerned to safeguard the EU passport for financial services, which constitutes a considerable part of the UK’s services trade surplus with its EU partners.


A free-trade deal on goods may be easier but there are still broader concerns. Firstly, the EU’s overall current account (and goods) is crucial since any deal needs to be


approved by all 27 other members. A potential ‘deregulation’ of product markets facilitated by Brexit will be constrained by ‘regulatory equivalence’ rules for exports to the EU.


Even for SMEs selling only domestically, UK product and labour markets are already the most flexible in Europe according to OECD indicators. According to the World Bank, the UK is the ‘best place to do business’ amongst the 28 EU members. Surplus with the UK is not uniform but concentrated in relatively few countries. This is 6th globally, so any hope of deregulation offsetting the Brexit shock for SMEs is likely to be too optimistic.


Negotiations cannot start properly until Article 50 is triggered and uncertainty seems likely to be the dominating mood for the foreseeable future. It’s always best to take advice from an expert if you are considering financial issues but particularly at the moment.


For further information about this or other financial matters visit the Haines Watts’ website. hwca.com


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THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2016


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