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Ramifications of Brexit on supply chains in Britain and the globe at large

Written by: Supply Chain Online
Published on: 28 Jun 2016
Category:

BREXITRamifications of Brexit on supply chains in Britain and the globe at large

The world never expected it, but here it is with us: Brexit. Love it or hate it, Britain will be out of the European Union, and the short- and long-term political and economical ramifications are huge.

As the world slowly wakes up to the reality of Brexit, businesses in Britain cannot help but consider its potential effects on their supply chain operations. Truth be told, whilst Brexit campaigns may have touched on many other ideological issues, the nation’s economy was the topic at the heart of the debate.

Renowned economists are now contemplating Brexit's influence on growth and employment within the EU. The supply chain in Britain and the rest of the world is one sector that will definitely bear a great impact of the referendum's result.

The political landscape of the European Union will never be the same again, though it may be too early to speculate on the reaction of other member nations to the exit of Britain, Europe’s second-largest economy. 

Britain has up to two years to negotiate for appropriate exit terms. After it finally exits, the remaining countries may choose to accommodate it by maintaining open trading relations. However, it is very probable that they could tighten relations with Britain to discourage any other wavering members from taking the same direction, which might lead to the eventual breakup of the EU.

After its departure, the UK will have to negotiate for new trade deals with the EU, which may involve the process of seeking membership in the European Economic Area, signing bi-lateral trade accords, seeking favoured nation status or invoking World Trade Organization rules.

New trade negotiations are bound to create barriers that will affect the supply chain structure and the positioning of inventory. It is actually the traders with deep insight and agility on supply chain who will be able to cope well with the emerging changes.