Has The Brexit Vote Affected The Industry?

It's just over a month since the post-Brexit vote and the line that has resonated with me most was tweeted by Ashley Blaker... "The last few weeks in British politics has been like watching a review of the year on your Sky box at x30", writes Duncan Payne, Regional Director, Azule Finance.

The financial forecasts of economic and political Armageddon have not materialised, but there are signs that a fiscal inferno is possible, if not inevitable.

The most recent economic data shows July business activity at its lowest point since 2009. Growth forecasts for the UK have also been reduced significantly, and the lack of confidence has hit the commercial property market hard, which incidentally is where a lot of our pension money is invested. The fall of sterling has also seen our home-grown businesses become more appealing / cheaper for overseas companies to acquire, and these opportunist moves might be just one of the many unforeseen consequences.

The FTSE100 is now well above pre-vote levels, but the FTSE250 is a far better indicator of the UK situation as it has a higher percentage of UK businesses and it has taken longer to recover, only now recovering to the same level as pre-vote. Sterling has not recovered, and is at an 18-month low against the euro, and a 30-year low against the dollar. This is great for exports of course, but the UK is primarily a service industry, with financial services making up a big slice of that. The UK is a net importer of goods, so the effect of the exchange rate move is likely to be inflationary pressure. Broadcast kit manufacturers are already raising their prices, so if you know you'll need kit, order it soon.

And for all of us in the TV industry who are looking for the up-side, one possible benefit is that it is hoped that the fall in sterling will make US funded films cheaper to produce here, so the big film studios will be rubbing their hands in glee. This is true, to an extent, but as much of the profits made by previous films which are then re-invested in future films have never been re-patriated back to the US. The profits were held locally here in the UK, so the exchange rate changes will have no positive affect in these cases. One genuine positive change of post-Brexit Britain is the impact on real estate values, where businesses looking for more space may take advantage of cheaper rental deals as they expand.

Change is not necessarily a bad thing, and is almost always necessary to promote growth and innovation. The most fundamental truth is that in periods like this, opportunities will always remain for those with the nouse, business acumen and bravery to succeed.

Having cash, or the accessibility of cash remains crucial to any business, because often opportunities arise out of the blue, and you may need quick money. I've had a number of discussions recently where clients have been happy to use their bank for asset finance. But every bank will have a limit to what it can readily lend to any one business, and funding with specialist funders like Azule will keep some headroom with your bank and allow them to lend you "quick money" for short term overdrafts for those unforeseen events and opportunities.

www.azule.co.uk

(JP/LM)