Updated: Aug 24, 2020
Written by Sofia Misan
Brexit, the upcoming withdrawal of the United Kingdom from the European Union, is a major global topic which is bringing uncertainty to all individuals who may be affected by it. This decision has been very complicated; causing economic turbulences and dilemmas amongst the people in the UK.
The uncertainty of such a change, and the political implications involved in the process, have been strongly affecting the UK’s economy, thus having an impact on businesses and people’s decision making in the country. This article will analyse how Brexit can affect startups in the UK and the Junior Enterprise concept. It will also investigate how this event may, in turn, impact WBC.
Westminster Business Consultants (WBC) is a non-profit Junior Enterprise, part of the JADE network, formed only by students of the University of Westminster. The students involved with WBC wish to gain professional experience while challenging themselves in a real life learning environment. Being based in the heart of London, England, WBC has been able to provide business consultancy services domestically and abroad since 1995. With this wide range of connections, WBC has been able to acquire a broad range of clients from startup companies to embassies.
Since Junior Enterprises are solely managed by students this means that many have yet to start their careers and have little work experience in a particular field. This is one of the main reasons many of the clients WBC works with are small to medium sized companies or startups. Many of these startups contact WBC when they are trying to expand their business, and some even come from outside the UK looking for help entering the UK market. This is an important factor to note when thinking about Brexit and its impact on startup companies, especially the Junior Enterprise movement in the UK. With the possibility of Brexit affecting the UK’s economic stability, many of the essential factors for WBC are now projected to change.
Decrease in Client Numbers
Economic behaviour does not only depend on the present and what is happening now, but also on what people and businesses expect to happen in the future. The shift of expectation on the future of the UK’s economic relations with the EU, and the rest of the world, has caused an increase in uncertainty. With this uncertainty comes a loss of business confidence. This means that many new businesses are less likely to open, and others are no longer willing to invest in risky projects with the possibility of growing. All of this has the potential to impact the availability of funds for startups, decreasing the number of projected startup companies in the UK.
With a decrease in businesses’ investment, this could also suggest a decrease in the number of clients for UK Junior Enterprises. Since WBC focuses on consultancy work, many potential clients may wish to conserve funds rather then spend and invest in WBC’s services. In addition, there is a projected decline in startups and small companies in the UK, decreasing the amount of potential clients for WBC.
Decrease in Economic Growth Number of Skilled Workers
The shift in expectations on the future of the UK’s economic relations with the EU has also caused a decline in the UK’s ability to trade, invest and migrate within the EU. This makes the UK seem less attractive for foreign investment, impacting economic growth. It also has a strong impact on the labour market meaning that tighter immigration restrictions could threaten the availability of skilled workers. This relation between skilled workers and economic growth is one that the UK should be wary about since this decline in productivity could have major implications in the future.
Again this major implication of Brexit impacting the UK labour market directly affects Junior Enterprises. This is due to the fact that many students wishing to study in the UK are international. This specifically impacts WBC since the organization is mainly formed by international students. These factors could lead to a decline in projects acquired by WBC and its ability to create efficient productivity.
Weakening Pound and Inflation
After the Brexit vote in June 2016, the value of the pound fell to a record low. It has been struggling to recover ever since. The depreciation of sterling suggests that expectations for future UK economic growth are low. A fall in the pound also suggests an increase in the costs of imports into the UK which have been driving up the cost of living.
With inflation and the increased cost of living, the result has been a decrease of consumers’ purchasing and spending their disposable income. Not only is this difficult for the families themselves, but also on new companies entering the UK’s market, and also for pre-existing small UK companies depending on those customers. Again, all of this impacts Junior Enterprises in the UK as they strongly depend on small companies and startups to make a profit.
Also, with the increased costs of imports, resources in WBC will tend to become more expensive and the company may face financial difficulties. This inability to self sustain as the number of clients decreases could cause major implications for the company in the long run.
In the end, Brexit is a huge decision which is greatly affecting the UK’s economy. It is easy to say that almost all businesses in the UK will be affected by Brexit no matter how big or small. Junior Enterprises in the UK will be no exceptions since many economic implications are soon to become reality. WBC will have to be prepared for the challenges ahead and must be ready to face whatever Brexit brings with it.
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