Last Friday the nation woke up to the news that the public had voted by a slim majority to leave the European Union. The shock waves were felt across the world instantaneously: the pound dropped to its lowest level in 30 years, the stock markets were in chaos and the political and social repercussions of a resounding ‘no’ to the European project raised questions for other member state governments.
Watching the political situation unfold over the past ten days has not always made for pleasant reading, and – as is customary for such an uncertain time – it would seem that almost everybody has put their two cents in. As an office we have strong links to Europe both through our multilingual projects team and international freelancer and client networks. As such, we couldn’t help but wonder what the future might hold for us as a translation company, and for the exporters we translate for.
As a translation company, we are not altogether worried for now. We work with a wide range of European and non-European languages, and recognise that the need for language services prevails even whilst trade lines are re-drawn. The languages we work with the most are those which are most widely used in eBusiness; these trends do shift, but not over night. A remote workforce also makes most translation companies less susceptible to economic uncertainties at home than others. So, to exporters. What will the next few months be like?
To Article 50 or not to Article 50? That is the question…
Speculation has arisen as to whether the new PM will actually activate Article 50 of the Lisbon Treaty and thereby formally set the wheels in motion for Brexit. As one of the few major world powers to not have a written constitution, there is no document which identifies a referendum result as legally binding; as such, they are ‘advisory’ and MPs will need to approve the decision in Parliament first. That being said, as no parameters were set out before the referendum for a base line majority to win, refusing the will of the electorate at this point would be a poor move politically. For the sake of this post, we will assume that Article 50 is triggered in September when Cameron’s successor is announced.
Markets hate uncertainty
As we saw in the run up to the referendum, financial markets are at their most volatile when there is a huge unknown. The pound took a substantial hit when the referendum result was announced, causing some Remain voters to fear the worst. A period of recovery last week appears to have been short-lived; clearly, the situation is still too volatile to call. We certainly would not advocate dismissing ‘Project Fear’ anytime soon.
The Bank of England looks set to respond to an unpredictable pound by cutting interest rates to stimulate domestic spending. This could have an impact upon product and service sales at home. With regards to exports, several companies will have been benefiting from a weaker pound for some time. Whilst we remain in this limbo period, it would seem reasonable to assume ‘business as usual’, albeit cautiously.
Once the formal withdrawal process has begun, we have two years to negotiate our exit terms. As these begin to become established we will better be able to assess the repercussions. This is the stage at which companies may need to start revising their business strategies in response to the changing climate. It should be stressed however that this two year period is strictly for exit terms, and does not cover every aspect of our future relationship with the EU; experts have predicted that bilateral treaties covering all areas are likely to take more than a decade to finalise.
Essentially, it’s a huge unknown
I’ll be honest here. Very few people anticipated Friday’s result; to come out ten days later with any sense of clarity would be to tell a huge lie. It is important, however, to acknowledge the uncertainty, and to make a contingency plan based upon what can be controlled.
Short-term plan, long-term goals
Although the UK will not be part of high-level decision making from the moment Article 50 is triggered, we will still be a full member of the EU for two years. As such, all current trade deals stand, and no additional tariffs will be placed on exports for the next two years.
For now, it is unlikely that overseas clients will be looking to make any drastic changes to their supply chain; particularly not for SMEs. Consequently, this two year period should be seen as an opportunity to consolidate existing relationships, proving to European clients precisely why your services are indispensable; this should go beyond competitive pricing. If additional tariffs or restrictions are imposed in the future, it’s better to create a lasting impression now and create strong bonds with those within your target market. Reviewing brand image and identity could be beneficial. For an example on a national level: Germany is not renowned for cheap exports; several of the products they sell are made for much less in other parts of the world. However, by establishing a reputation for high quality, they’ve made ‘Made in Germany’ a brand with positive connotations for consumers. At a company level, it might be worth identifying your USP and capitalising on it now.
It is also worth considering the implications that changing trade deals may have in the long-term. We don’t know for now whether the level at which we trade with the EU will change dramatically or not. However, it can’t hurt to review other global markets now, to see whether other areas would also prove lucrative for your particular product or service.
Whatever the future holds for UK and EU exports, one thing is clear: communication is going to be more important than ever. It’s certainly an interesting time to be working in translation or international eBusiness. If you need help tailoring your service literature or marketing campaigns to an international readership, then feel free to contact us for advice.