What Brexit could mean for consumer goods.

The recent Brexit talks have raised concerns for consumer goods as these are regular items bought by consumers and a continuous supply is necessary. The number of macro-economic symptoms affecting FMCG companies is huge. Some of the more evident changes in the industry is the moving of the company’s headquarters from the U.K. to other European countries. This would cause a huge depreciation in the pound as manufacturing will also make its way overseas. This would also mean a harsh and viscous effect of recession as big companies such as Sony and Panasonic have shifted headquarters in panic out of the country leaving a huge trail of suddenly unemployed people. The direct impact of such actions would be unemployment and the ultimate being the drop-in value of the pound.

In relation to the consumer goods, an increase in prices will temporarily bring down the demand at least until there is an increase in employee wages, meaning there will have to be a balance between consumer goods prices and employee wages to give them enough buying power. Decrease in spending will decrease the circulation of money which will in turn reduce the spending per capita. An economically stagnant country does not yield strong in the future of the country. The inflationary prospect of Brexit is that around 53% of the imported products come from European countries, meaning that more than half the imports will be affected by inflation due to stringent import duties and conventions. Import substitutions will have to be put in place to avoid this major setback. Tesco, Marks and Spencer and such companies are increasing their stocked merchandise from the EU countries so that they have smallest possible price increase after the Brexit deal is put in place