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For all the doom and gloom, Brexit does not have to end badly. It could be a prosperous new start for the UK, if only we can jump out of our proverbial box and start looking for new friends and business partners outside of the EU. Further east, for example, the emerging economies of Asia hold immense potential for UK business partnerships.
Article by Siddharth Shankar, CEO – Tails Trading
Asia’s population and economies are booming. Increasing salaries mean the region has the fastest growing middle class in the world. It also boasts the highest number of millionaires and billionaires of any continent. As a result, Asia’s population has an increasingly disposable income and consumption is increasing. The demand for products and brands is at an all-time high and this is set to continue for the foreseeable future. Health-care spending alone is expected to exceed $3.5 trillion by 2020. Indeed, collectively, Asia represents 60 percent of the total buying power of the world. Exporting to gives UK businesses access to a population of 4.6 billion people – 75 percent of the world’s population. Millennials in Asian countries are starting to lead the market with an open mind which appreciates western culture and products. The UK in particular has a real privilege in this market. There is a particularly strong demand for high-quality British-made goods. One obvious reason for this is that half of Asian countries are either still part of the Commonwealth or an ex-colony.
“It’s of the utmost importance to see Brexit not as an end-of-the-world scenario but as an opportunity to step outside of our comfort zone and put all our efforts and energies into forging new relationships and exploiting the myriad opportunities of the world’s emerging markets”
The latest figures from the Department for International Trade already show a significant uplift in exports to Asia. UK exports to India grew by 31.8 percent in the year to March 2018, whilst exports to China grew by 15.3 percent. This has already helped UK exports reach a record high this year. In the view of International Trade Secretary Dr Liam Fox, this shows that ‘far from the negative forecasts after the EU referendum, there is every reason to be optimistic [about UK trade]’. It is time to look to newly risen markets such as Asia and start a new phase of negotiation to sign new trade deals and secure the UK’s position in these markets and ensure it withstands further global competition. Given the fact that the US-China trade war is putting more pressure on both Pan-Asian countries and Latin American countries – many of which are suffering significant side effects – the prospects of signing new trade deals with the UK would currently likely be a more enticing prospect. UK Government does need to apply an overall strategy for fostering new trading relationships that emphasises the economic gains shared with each party and gives less standing to border issues and other political and religious affairs. This would actually offer a helping hand to many countries, for instance within the ASEAN, in this particular political environment. Such a gesture would not only be appreciated but also give UK businesses a head start for further cooperation.
Sterling has been fluctuating ever since the process of leaving the EU began following the 2016 referendum. This has reflected the uncertainty of the market regarding the unclear policies of the UK government. Although sterling has been recovering in recent months, we have enough reason to believe that when Brexit actually happens it will fall again. By then, the Pound’s value would be set to a mean between Pre-Brexit price and Post-Brexit dips, hence it would be lower than Pre-Brexit. It’s important to mention this is to clarify the situation and what needs to be implemented to remedy it. Since the Pound is going down for the time being, it is only logical for the UK to look outwards rather than inwards for local capital and production. If the pound weakened, exporting would become more profitable as the price of UK goods would then become more competitive. For UK local capital, it would then be wise to put investment into local businesses which export goods abroad. Foreign direct investment should be welcomed and given a better environment to increase job opportunities and production. It’s of the utmost importance to see Brexit not as an end-of-the-world scenario but as an opportunity to step outside of our comfort zone and put all our efforts and energies into forging new international relationships and exploiting the myriad opportunities of the world’s new emerging markets.