Monthly Archives: October 2016

SFE – “Realities of Selling into Post-Brexit UK”

Since the UK’s vote to leave the EU on June 23, the Pound has been pummeled, politicians have resigned, and investors were spooked. But UK citizens and companies have largely gone about their business as usual. The country still spends $28.9 Billion on imports and represents the 5th largest economy in the world. The reality for companies selling into the UK market is the economic dynamics and exchange rates are working in their favor, making it is increasingly affordable to sell there.

While we’re not economy experts or fortunetellers here at SFE, we do enough business across borders that we feel it’s important to track and report to you on this dynamic new post-Brexit environment. Our UK sales partners have had front-row seats to witness the gyrations.

Financial markets hate uncertainty, so the reaction of the British Pound is hardly surprising considering that UK witnessed in quick succession a vote to leave the EU, resignation of its Prime Minister, and a leadership crisis in the Labor party.

The position of the Pound continues to decline against the US Dollar, but this imbalance has its benefits: UK exporters will benefit, as well as tourism, and perhaps most importantly businesses selling into the UK from abroad have discovered an overall improvement in the risk profile. That is, it has become much less costly for software and technology companies to launch and sell into post-Brexit UK.

Further, the change to the ‘back of the queue’ view on trade from the US, quickly followed by Canada, Australia, Germany and 11 others—all now seeking trading agreements—mean the fifth largest world economy will not disappear overnight. This fact was recognized by Theresa May, who has appointed a new role to the Cabinet of Secretary of State for International Trade. Imports into UK have averaged USD $28.9 Billion annually since 1955 and reached an all-time monthly high in August 2016.

At SFE, our value as a beachhead for new business development in Europe has only improved as a result. And while we cannot predict market fluctuations in the distant future, what we can say with some confidence now is that the UK is very much open for business and trading partners will not be so quick to erect barriers as the rhetoric may have once indicated.

Interestingly, some are positioning this post-Brexit window as a chance to strengthen a UK manufacturing industry that has been gradually eroded in the last 15 years – good news for software and equipment vendors alike. Further, the IMF revised their UK growth expectations and, in fact, they now forecast more positive growth for the UK in the next two years than for France and Germany. And despite some uncertainties over Brexit, the UK will remain attractive to foreign investors because of the transparency of its legal and regulatory environments.

To those living in the UK there is economic concern, but tempered now with a sense of excitement in the air as the dust settles. The one thing that we can be sure of is that the post-Brexit environment can create opportunity and this could be the best time to launch in the UK with lower costs and potentially high rewards.