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Brexit and Trans-Continental Trading for Businesses

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Brexit and Trans-Continental Trade: What Happens Next?

Just as there seemed to be a clear path ahead towards a trade deal being agreed between the UK and the European Union, a parliamentary vote put a spanner in the works. The vote, which took place yesterday, saw the government defeated on its Brexit bill. It means that Parliament will now have the chance to accept or reject any deal made during negotiations with Brussels.

This could have grave implications on trade between Britain and the rest of the world, not just Europe. What could happen post-Brexit when trading with other countries and continents? Here are three different scenarios:

What if the UK remains in the Single Market?

As a current EU member, the UK is part of the Single Market. Membership of the market allows British companies to trade freely with the rest of the EU, as well as Norway, Iceland, Switzerland and Liechtenstein. Few restrictions are in place right now.

This scenario is unlikely, but if the UK stays in, little will change in how businesses buy and sell in Europe. There could be a few caveats depending on whether the UK has to pay a fee to the EU to remain in the market. One consequence could see businesses paying more tax to cover the cost.

What if the UK leaves the Single Market but pays international trade tariffs?

The preferred option of many in the government, the EU already has a similar agreement with Canada, which was ratified earlier this year. It works by removing up to 98% of existing tariffs in place between the two areas, in exchange for easy access to the Canadian markets.

If a deal like this is agreed between the EU and UK, British businesses would have to pay small tariffs in order to import goods from the EU. This may limit the impact of any potential price increases post-Brexit. A ‘Canada-plus-plus-plus’ deal has been talked about, but the EU’s chief negotiators have ruled it out.

What if the UK leaves the Single Market without a trade deal?

This is the outcome that has the most uncertainty. To not have a trade deal in place could see the cost of everything from imported food to international courier services rise significantly. It could price UK companies out of the European market, as British and EU businesses will have to pay tariffs in order to trade with one another.

Businesses with a global client base may look to markets such as North America, Africa and Asia to boost sales. This will involve looking for the cheapest deal on international tariffs and waiting on whether the UK sets up any trade agreements with other parts of the world.

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