Industries across the UK were not prepared for Brexit. Following the ‘leave’ result, they were forced to quickly rethink future strategies to avoid a sudden a drop in investment and revenue. International markets and investors panicked as the pound fell to its lowest level in 30 years, twice the amount it fell during the UK’s 2008 recession.
While it is likely that most industries’ finances will stabilise prior to rebuilding connections with foreign and domestic investors, the following sectors are at a higher risk of facing financial difficulties.
There has been a surge in British car manufacturing over the last 10 years, but it is likely Brexit will put any short-term gains on hold.
The UK’s automotive industry produces an average of 1.6 million cars each year. A total of 77 percent are exported abroad, of which 58 percent are sent to EU countries.
Toyota issued its response to the referendum last week, stating: “Back in 1992, Toyota chose the UK for its first major manufacturing operations in Europe because of the availability of skilled workforce and the presence of a strong network of suppliers.” The manufacturer went on to say, “We are committed to our people and investments, so we are concerned that leaving would create additional business challenges. As a result we believe continued British membership of the EU is best for our operations and their long term competitiveness”.
UK-based low-cost airline EasyJet saw a 20 percent drop in its share price following the Brexit vote
Following the ‘leave’ vote, UK-based airlines will have to rethink their European routes, in keeping with EU laws and regulations. They will also have to recalculate fares and routes, taking into account the cost of visas.
UK-based low-cost airline EasyJet saw a 20 percent drop in its share price following the Brexit vote, and has since discussed moving its headquarters overseas to an EU country.
A lot of UK-based pharmaceutical companies carry out their research and business overseas, which could cause logistical issues in the long term. However, the biggest uncertainty facing the industry is the impact on the regulatory processes and market authorisation of drugs in the UK.
The European Medicines Agency is responsible for the centralised authorisation of medicines valid in all EU countries, and although the UK also has its own authorisation process, it currently follows the EU’s drug regulations. The EU’s authorisation allows for the early approval of some drugs, providing faster access than the UK’s own process would.
Financial services sector
Shares in British banks were hit hard in light of the leave vote, causing loans to surge and a slump in investment banking revenues. Regulators have warned that banks must consider restructuring their operations and carrying out added assessments.
The hardest hit in the sector were Lloyds, Barclays and the Royal Bank of Scotland, which each suffered share price slides of more than 30 percent at the market open. However, trade began gradually recovered to 20 percent by the afternoon.
All four sectors will have to rely on maintaining strong relations with the EU and its member states in order to uphold stable trade deals with European countries, despite the outcome of the EU referendum.