Article 50 — the measure by which nations can leave the European Union — was officially triggered recently, meaning the process of UK removal — i.e. Brexit — is underway. While it will probably take 24 months or longer to completely sort out, it seems like a rational time to wonder about business implications for companies looking to do more business in the EU nations.
Let’s be honest upfront: there is concern, especially from other European countries and some Japanese business leaders. There are some companies and verticals seemingly more protected, and a recent survey indicated small businesses aren’t as worried about Brexit as you might think. That’s the overall landscape: there seems to be worry, but no one is 100 percent sure how it will all play out, so many are acting with a degree of cautious optimism.
But pay careful attention to two things happening right now: first, as Business Insider just discussed, Brexit is hurting London’s stance as a financial capital. Over the next 24 months, that will probably get worse before it gets better. And now consider this: German firms are moving money from the UK back to Germany right now. Germany was already the richest individual country in the EU (it had surpassed UK some years ago), and this is going to widen the gap.
The clear play here if you’re a U.S. or Canada-based company is considering an expansion to German markets in 2017 and beyond. The German sales market is huge, and you have a very stable test market for your product/service right next door in Austria. That’s a big win on its own; if you can find product-market fit in Austria (we can help), the shift to winning some sales battles in Germany isn’t a big jump.
Germany has some of its own issues, yes, although Merkel does currently look strong for her election and The Financial Times is reporting that this is Germany’s best economic health in six years. (To be fair, consumer spending is somewhat down over the past half-year.)
Is Germany going to totally replace London and the UK as a fiscal powerhouse? It’s not even that; Germany already was a fiscal powerhouse. But if you’re sitting across the ocean and need a logical expansion move in the next 12-18 months, it’s definitely not the UK. It’s Germany — and in reality, it’s probably a start in Austria. We’d love to help.
Oh, and as a little bonus, there’s this. Many times, people think the advantage of a US-based EU HQ in London is language. But you know what? Austrians speak some perfect English too: