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UK bracing for Brexit impact

UK bracing for Brexit impact

(19 February 2019 – United Kingdom) The number of companies transferring operations away from the United Kingdom (UK) or cutting headcount is increasing, new reports show.

Honda announced it will close its Swindon plant by 2022 – claimed by the Prime Minister Theresa May to have nothing to do with Brexit - as a steady increase in the number of departing corporates begins to rise quickly. While Tory MPs said that Honda's decision to consolidate production in Japan is unrelated to Brexit, Japan has secured a landmark trade deal with the EU to slash tariffs on goods. Honda can be confident of being able to export to the EU, while Britain could face higher barriers for access to the EU market. Airbus CEO Katherine Bennett warned that a no-deal Brexit would be "catastrophic" for the industry, adding that “there is no such thing as a managed ‘no deal’” for producers.

Toyota owns a plant in Derby from which 90 percent of output is exported to the rest of the EU. The Japanese carmaker warned last year that production would stall under a hard Brexit. Meanwhile, BMW has multiple facilities throughout the U.K. and has flirted with shifting production of its iconic Mini to the Netherlands. It has also previously said production would stop for a month.

Fitch Ratings confirmed it may downgrade the UK’s "AA" debt rating based on growing uncertainty about the negotiations between Britain and the EU over Brexit.

Recent full year bank financial results painted a mixed picture, with HSBC revenues falling the final weeks of 2018 in the midst of financial market volatility. HSBC did increase profit and revenue in 2018 although its performance fell short of analyst expectations. Net profits were $12.6b, 30 percent higher than in 2017 yet short of analyst forecasts for $13.7b. HSBC is one of the world’s largest trade finance providers, and analysts and investors had become concerned that the trade spat between China and the US would damage it. HSBC CEO John Flint maintained there had yet to be a significant impact however he warned sternly that a US threat to increase tariffs on $200b of Chinese imports from 10 to 25 percent could cause significant disruption.

Barclays reported a full year net profit of $1.82b for 2018 and set aside almost $200 million for Brexit following the group’s sizeable 2017 loss on the back of ongoing Payment Protection Insurance (PPI) payouts. The European Central Bank (ECB) will reassess the outlook for bank lending next month as there is a risk that banks could tighten credit supply and exacerbate the current economic slowdown.

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