Signs of Economic Trouble Grow for Great Britain as Brexit Approaches

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From a modest office in a small town in northeastern England, Elliott Peckett’s family stocked the world with costumes. 

Billowy white Marilyn Monroe dresses. Red velvet Santa caps. Rhinestone-studded Elvis jumpsuits.

They were shipped out by the millions to 42 countries across the globe, and they brought the profits of countless Halloween parties, Carnival parades and Christmas wonderlands back home to England.

But thanks to Brexit, not anymore. After 122 years, Peckett’s costume company, Smiffys, is moving its headquarters to the Netherlands.

“One word sums up the issue: uncertainty,” said Peckett, the company’s director. “Any business needs as much certainty as it can get around the cost of goods or the markets you can trade in. But right now you don’t know where you are from one day to the next.”

That uncertainty has become a defining feature of the British economy since the country stunned the world with its June 23 vote to exit the European Union. And although the initial economic impact has been milder than many feared, there are signs of a gathering storm as businesses opt to shift operations overseas rather than stick it out in the U.K.

Nearly six months after the vote, the shape of Britain’s post-Brexit relationship with Europe remains a mystery. Prime Minister Theresa May has declined to say exactly what she wants from the two-year negotiations she has said she’ll trigger by March, a timetable that would put Britain outside the E.U. by the summer of 2019.

With divorce proceedings not even begun, businesses have been left to guess where the talks could end up. Many are planning for the worst, expecting that the country will wind up outside both the common market for commerce within the E.U. — the world’s largest — and the customs union that governs trade between E.U. members and the rest of the world.

For those firms, preparations go well beyond contingency planning. They have advanced to actively scouting out new homes for work that needs to be done from within the single market.

“If you need to have an investment banking operation up and running in Europe in 2019, you need to start now,” said Mark Boleat, policy chairman for the City of London, the skyscraper-strewn heart of Britain’s behemoth financial industry.

So far at least, however, no mass exodus has begun. Firms may be planning a move, but they haven’t gone through with it or even announced their intentions publicly. As a result, the true impact of Brexit can be hard to see in macro gauges of the country’s economic health.

Before Britain voted, some economists and pro-E.U. politicians had forecast the gloomy prospect of a nearly immediate recession should the public opt for out. But the dire predictions — derisively dubbed “Project Fear” by the pro-Brexit campaign — have not come to pass.

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SOURCE: Griff Witte 
The Washington Post