With media terming it as one of ‘black swan’ events , UK’s exit from European Union has got enough publicity than it deserves.
For rest of the world (unless you work with UK-based businesses or are in currency trading ) , Brexit is another short-term aberration to doing business.
Here are some thoughts on how it matters to Digital economy.
- First of all, UK is not going anywhere. It is still closest to Europe and most of business ties between UK and rest of the Europe or world would continue. While short-term changes (like re-working existing contracts in pounds) would be required, it is expected to settle down and resume status-quo in medium term.
- UK will continue to be member of EU for at-least two years until separation agreements are negotiated . So, businesses have enough time to adjust or wait & watch rather than going for knee-jerk reactions. It might even turn out better when agreements are sorted out finally.
- For Digital products (like online advertising ) , it hardly matters whether UK is in EU or not. EU does not impose tariffs on digital products tagged as intangible goods. So, existing arrangements with UK and rest of EU will not go much change.
- For non-digital products (like cars or services), importing from UK will be cheaper as Pound becomes weaker. So, it is actually beneficial for rest of EU. Details about tariffs might offset some of the advantages though. For people/businesses in UK, it now becomes costlier to import from EU though.
Biggest issue is about the uncertainty associated with whole separation process. It will impact people as well as businesses uniformly. Decision making will be slow and so are investments in digital areas.
On the other hand, businesses can take counter-view and adopt Churchill’s notion of ‘never waste a good crisis’. Digital investments are inherently ‘global’ and offer opportunity for businesses to de-risk issues of geo-political nature exactly like this one. It is actually good argument to go all out on ‘Digital’ now.
While everyone is waiting for the ‘fog’ to clear, smart businesses should keep on engaging with consumers Digitally and reaping rewards for it.