New data from the National Center for the Middle Market (NCMM) suggests more than one-quarter of U.S. middle market companies will decrease business investments in the United Kingdom following the results of the “Brexit” referendum.
According to the report, which details survey responses from 569 middle market firms, polled one week after the U.K. referendum results were announced on June 24, the same number say they will reduce their purchases from and sales to the U.K.
Half of all middle market firms (51%) predict no significant impact on their business, while the remaining 49% anticipate a somewhat to extremely significant impact on their operations.
54% middle market firms having international operations foresee a moderate to severe impact. The UK will presumably require its own shipping procedures upon leaving the European Union, and middle market executives express concern about the red tape this could create for them and their trading partners. Worries of regulation changes surrounding imports/exports—as well as varying fees and tariffs—are rising. Some fear this will prove more challenging if more countries follow the U.K.’s lead out of the E.U.
U.S. companies predict some reductions in U.K.-based business investments, purchasing plans, and imports/exports. 28% of firms predict decreases in U.K. business investments, with a similar number (26%) anticipating an increase in U.S. business investments.