Investment delaysBMI reckons every sector of the UK economy will be hit, at the very least, by hold-ups in foreign investment in the short-term. Obviously, the affect on capital-intensive industries will be most acute. However, if the pound settles at a weaker level against the dollar, once post-Brexit negotiations have been wrapped up, the UK could become an attractive place for foreign, particularly dollar-based, investors.
Cost increasesFor companies with large workforces, a reduction in immigration after the UK votes to leave could push up wages, putting pressure on companies to keep other costs under control or to hike prices. Sterling depreciation will also hit companies that have to buy from abroad or have dollar-denominated debt. Firms should also look at the regulatory landscape – compliance costs could increase or a post-Brexit bonfire of red tape could ease the process of doing business.
ExportsThe fate of exports is largely dependent both on what the pound does after a vote to leave along with the terms of exit the UK is able to secure. BMI assess the likelihood of Brexit having a "net negative impact" on an industry's export performance taking into account both these possible developments.
Public fundingFor some sectors, leaving the EU could mean a very direct hit in terms of lost income from EU grants and projects. Although the UK government might replace these funds, there is no guarantee they would – or that they would go to the same projects and industries or in the same amount.
The gloom table
|Sector||Investment delay||Cost increase||Negative affect on exports||Decreased public funding||Score|
|Power and utilities||Yes||Yes||No||No||Two|
|Mining and metals||Yes||No||No||No||One|
While pharmacuticals was the only other industry – of the ten studied – that would face a drop in EU money, BMI do not believe that UK-based companies would suffer export fallout or higher costs, though investment into the research-and-development heavy industry could stall. For the City of London, BMI said the picture would be mixed. The capital would "maintain its status as a global financial centre, but its importance would very likely diminish," with certain sectors like foreign exchange trading being hit the hardest. In terms of direct financial spillover, however, BMI said that most UK banks "are heavily domestically focussed, and are generally adequately capitalised to be able to withstand the short-term volatility in wholesale markets and a depreciation in sterling."