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Brexit, lack of ethnic diversity & affecting UK businesses

IT HAS been over two and a half years since Britain voted to leave the EU, yet the future seems as unclear as it was the morning after. A lot has been said since the referendum, and as we are heading towards what seems to be the final stretch of the road, no one knows what exactly post-Brexit Britain will look like. Yet one thing is certain – for better or worse, UK businesses will be impacted by Brexit.

FTSE 100 Companies faced with volatility amidst Brexit negotiations

The Bank of England has seen the national currency experience some unprecedented volatility in the period that has transpired since the Leave vote as foreign currency exchange rates have responded to the ups and downs of the Brexit negotiations.

Although a weak pound might be an asset in some cases, especially in forex trading or imports, the overall landscape of the global financial markets seems to paint a somewhat bleak picture. For large companies, like those on the FTSE 100, Brexit may have a negative impact.

FTSE 100 is a stock index that represents the 100 biggest companies by market cap listed on the London Stock Exchange. It has been widely viewed as an accurate indicator of UK stock market health, even though it has somewhat been replaced in that position by the more expanded FTSE 250.

In the months after Brexit, the FTSE 100 fluctuated wildly to reflect the ongoing uncertainty about Britain’s future in the post-EU era. It fell significantly after the French President’s comments in October 2016 and after the EU changed its negotiation approach in January 2018, but rose again when Prime Minister Theresa May called for a general election and when the UK and the EU reached a transition period agreement in March 2018. Following these fluctuations, it’s hard to predict how this will impact UK business.

Lack of ethnic diversity could prove harmful for top companies after brexit

FTSE 100 companies are also notoriously lagging behind in ethnic minority representation, with very few senior-level officials from African or other minority backgrounds. According to a 2017 research report, 58% of FTSE 100 firms lack any ethnic minority representation in the boardroom, which could prove to be problematic in the post-Brexit era.

It is highly likely that after the UK’s departure from the EU, the country will have to seek out strategic trade and financial strategies elsewhere to mitigate the effects of leaving the internal market and until its new relationship with the EU can be formed.

Yet this outward-looking approach is undermined by the fact that Britain’s top companies are predominantly run by people who share very similar ethnic and cultural backgrounds. A report backed by the government also urged top firms to embrace diversity and ensure that ethnic minority groups are represented on the senior level by 2021.

Meanwhile, small businesses also struggle to make sense of the impact Brexit will have on them. Leaving the EU will mean that they will no longer have access to funds like the European Investment Fund, which supported innovation across SMEs, or EU-specific tenders.

It is also envisaged that cross-border cooperation with EU-based companies will become harder, while they may face extra duty and VAT costs for imports.

As the deadline draws closer, the impact of Brexit will start to become more clear – yet its consequences on the business sector might have a slow-burning effect that is hard to predict.

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