There are approximately 1,500 companies active in the UK that have a Dutch owner.
Together, they generate a turnover of about GBP 40 million annually. A multitude of this number of companies has an intensive trade relationship with the UK and is thus exposed to the whims of the foreign exchange markets. However, mobility is not just affecting the companies, because also consumers - in the UK and in the Netherlands - are troubled by this.
The analysis by sector shows that the influence of currencies is high for almost all sectors. In construction and real estate, the influence on balance is neutral, but in agriculture, food and industry, that mobility is of essential importance. In leisure and food, consumer confidence is a sensitive issue, while real estate is mainly a matter of investment willingness. The transport sector will in particular be affected by trade obstacles whereby customs formalities will be in force.
The products and services of agricultural companies are appreciated in the UK, and therefore companies will be doing well to strengthen existing relationships with their British partners. This also applies to exporting food companies. But in order to stay ahead of abrupt loss of demand, companies can pay more attention to scenario planning. In the construction sector, the difference in building regulations per country is one of the barriers to internationalization. Monitoring of the changes in regulations is a first step for the upcoming Brexit.
For industrial entrepreneurs, the creation of distinctiveness remains the most important weapon. This can be achieved through the locking-in of customers through servitization: providing smart services. For leisure entrepreneurs, having distinctiveness is also of great importance. This puts the leisure entrepreneur internationally in the spotlight. Should British consumers unexpected stay away, then it is possible to investigate which markets would be able to compensate for the drop. In the Netherlands, also many retail companies are active with exposure to the UK. They can protect themselves against the adverse effects of the Brexit through a reorientation of the assortment, pricing and possible expansion to new sales markets. For the transport companies, the logistics process will certainly change over time. This can lead to delays and increased costs. It is therefore important to discuss this with clients at an early stage and above all in a proactive way. The service sector has major interests in the UK. They will not let themselves be impeded by Brexit and will continue their growth strategy in the UK. What can also help in estimating the possible consequences of Brexit is to engage with fellow entrepreneurs and to exchange experiences with each other. This may make the uncertain future of Brexit slightly more transparent.
Brexit is likely to result in a ‘loss-loss’ situation. The UK will incur economic damage and, within the European Union, the net effect will also not be positive. That is the general perception. Companies however - in whatever sector - can prepare themselves individually to minimize this ‘loss’. Different strategic options are possible for this. Often thinking about strategy is based on predictable future developments in a business environment. That makes thinking about post-Brexit conditions difficult. Based on limited information, strategic decisions must be taken. A good first step is to proactively engage with customers, suppliers and also fellow entrepreneurs. This can often work to clarify and help in thinking about strategic possibilities.
Flowers
The UK, unlike the Netherlands, is highly dependent on the import of agricultural products. Indeed, the UK's self-sufficiency is very low with 54%. For food supply, the UK is for 27% dependent on the EU. The Netherlands is the most important EU country concerning the imports of foodstuffs from the UK. In particular, fruit and vegetables are important import products for the UK. The self-sufficiency for meat, dairy and eggs is a lot higher.
Due to the fall of the British pound last year, agricultural products became more expensive. A good example are the flowers. Approximately EUR 2 billion is spent on flowers in the UK. The majority (90%) comes from abroad. The Netherlands is by far the most important supplier. The import value of Dutch flowers is approximately EUR 550 million. However, flowers are price sensitive. Due to the lower rate of the pound the flowers are becoming more expensive and demand decreases.
Finally, the fishing sector depends on the results of the negotiations between the UK and the EU. Dutch fishermen fear that they might lose a significant part of the fishing grounds with a hard Brexit.
Click here for the ABN AMRO sector report, available only in Dutch.