Big US companies weigh risks af­ter UK exit

Pakistan Observer - - ECONOMY WATCH -

WASH­ING­TON—Rat­tled by the Brexit shock, ma­jor US companies are seek­ing more clar­ity about the fu­ture of the Bri­tish mar­ket, their pre­ferred en­try port to Europe.

From cloth­ing chain stores to au­tomak­ers, the big names of “Cor­po­rate USA” have long flocked to Bri­tain, at­tracted by its tax ad­van­tages and a com­mon lan­guage, and by the prospect of ac­cess­ing the Euro­pean Union mar­ket and its hundreds of mil­lions of con­sumers.

Un­sur­pris­ingly, sev­eral large US companies had pre­vi­ously voiced sup­port for Bri­tain to re­main in the EU ahead of Thurs­day’s his­toric ref­er­en­dum that ended with the op­po­site, un­ex­pected de­ci­sion: the first exit of a coun­try from the bloc.

With $56.1 bil­lion in ex­ports in 2015, Bri­tain is the main des­ti­na­tion for US goods in the 28-na­tion Euro­pean Union. The US ser­vices sec­tor, es­pe­cially banks, also has a strong pres­ence in Bri­tain, es­pe­cially in the City of London, where Wall Street giants em­ploy tens of thou­sands of peo­ple.

“Amer­i­can companies’ in­vest­ments in Bri­tain are worth more than half a tril­lion dol­lars, and many of those in­vest­ments were made to reach not just Bri­tish con­sumers but those in the Euro­pean main­land as well,” said Thomas Dono­hue, head of the US Cham­ber of Com­merce.

The vote in favour of Brexit im­me­di­ately raised ques­tions about how Amer­i­can companies would deal with the up­ended Euro­pean or­der and whether they would cut back their in­vest­ments in Bri­tain.Ques­tioned by AFP, big companies were care­ful to not rush into judg­ment on the de­vel­op­ing sit­u­a­tion but ex­pressed a de­sire to see more clearly how Bri­tain’s re­la­tion­ship with its for­mer EU part­ners would work out.

“The UK is an in­trin­sic part of our Euro­pean supply chain and we urge all par­ties to reach an agree­ment that quickly re­moves the un­cer­tainty, al­lows the UK to re­tain full ac­cess to and from the sin­gle mar­ket,” said Mark Dorsett, man­ager for Bri­tain at Cater­pil­lar, the min­ing and con­struc­tion equip­ment maker.

That is a cru­cial is­sue for US companies: Will Bri­tain con­tinue to ben­e­fit from free cir­cu­la­tion of goods and peo­ple in the EU? The au­tomaker Ford, which em­ploys 14,000 peo­ple in Bri­tain and racks up nearly a fifth of its rev­enues in the coun­try, cer­tainly hopes so. But it is pre­pared to switch gears if that proves wrong.

“Ford will take what­ever ac­tion is needed to en­sure that our Euro­pean busi­ness re­mains com­pet­i­tive and keeps to the path to­ward sus­tain­able prof­itabil­ity,” said Ford spokesman John Gar­diner, stress­ing no changes to cur­rent in­vest­ment plans had been made so far.—AFP

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