For area businesses, uncertainty abounds after ‘Brexit’ vote

A London resident wrote to her Twitter followers, “Dozens of messages from my US chums: ‘What have you gone and done!’ ”

That question reverberated around the world on Friday after voters in Great Britain approved a nonbinding but decisive referendum demanding that the United Kingdom withdraw from the European Union.

The value of the British currency took a tumble on world markets while, in the United States, the Dow Jones average closed down 610 points amid uncertainty among companies that rely on exports to both the United Kingdom and Europe about what the impact would be on them.

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Some officials, however, such as those from Broomfield-based metal-can manufacturer Ball Corp., which is in the process of closing on its acquisition of British-based Rexam PLC, believe the effect will be minimal.

“Although the markets could be volatile for a period of time, we primarily are in a beverage-can business in the U.K., and consumers will continue to drink beverages out of cans, so we don’t anticipate an impact on our business,” said Renee Robinson, Ball’s manager of corporate communications. She said the Rexam transaction remains on track to close pending U.S. regulatory approval.

Keith Maskus, an economics professor at the University of Colorado Boulder’s Leeds School of Business, noted that “Colorado is pretty heavily export oriented” but added that the change might be more different than good or bad.

“Interest in agricultural exports could be away from Europe and more to Asia, and that actually will work pretty well,” he said. “The Japanese yen is going up in value, so that can increase our exports there. Ag, tourism, tech, services — Colorado is much more focused on Asia than Europe.”

A lot must be sorted out, Maskus said.

“Britain and the rest of Europe are going to have to figure out what their new trade relationship is going to be. It’s an important change for Europe but not necessarily monumental, depending on what tariffs they impose on the U.K. — and the results of that will have an impact on U.S. exports.”

Many corporations based in the Boulder Valley and Northern Colorado also have established offices in the United Kingdom, and Maskus said “any Colorado-based company that has some kind of headquarters operations there will have to reconsider what they’re doing. They’ve located there to trade with Europe, but there’ll be higher trade costs.”

The larger impacts, he said, could be on trade agreements with the United States.

“This really throws a big wrench into negotiations over the TTIP (TransAtlantic Trade and Investment Partnership) that’s still being negotiated,” he said. “The main partners are the United States, Canada and the EU as a bloc. It has to do far more than tariff cuts — trade regulations, product regulations, opening up service markets, tech, information. It’s a very big deal — but it was all predicated so far on negotiations between two partners, the U.S. and the EU. With the United Kingdom pulling out, Europeans are going to be very much focused on new agreements with them and that will divert their attention away from the TTIP quite a bit. Britain will be a fourth trading party, so the U.S. and Europe will have to go back to the drawing board.

“That will also make it more difficult for President Obama — or Hillary Clinton, if she’s elected  — to get the Trans-Pacific Partnership passed. This vote in Britain will give more ammunition to the group against the TPP.”

Presumptive Republican presidential nominee Donald Trump and Democratic challenger Bernie Sanders have opposed the trade pacts.

In general on Friday, the watchword was uncertainty. Most local companies involved in exports or expansion to Britain that were contacted by BizWest said it was just too early to tell what the impact would be — especially because British voters’ decision to leave the EU was largely unexpected.

Even venture capitalist Brad Feld, co-founder of the Boulder-based Techstars incubator that opened a London branch in 2013, had yet to assess the ripple effects. In an email to BizWest on Friday morning, he summed up much of the business community’s mood with four words: “I have no clue.”