In this article I’ll discuss what the likely outcome of Britain’s decision to leave the European Union, better known as Brexit, will be on the cleaning industry?
We’re OUT!
Whether you agree with the results of the referendum held on the 23rd of June or not, the ‘majority’ of the British population wanted to leave the European Union. Approximately 52% of the voters decided it would be best for them and their country to leave the European Union.
Related: Brexit causes dramatic drop in UK economy, data suggests
Soon after the results were announced, the value of shares and investments, but also that of the GBP plummeted. The GBP had reached a historical low in less than a week, while shares from stock markets from around the world had experienced drops of more than 10%. It was clear that the business world had taken the biggest hit.
Women are taking center stage to clean up the mess after Brexit vote https://t.co/lEygNRk6Ls via @business
— Women Killing It! (@WomenKillingIt) July 21, 2016
British Council view
The British Cleaning Council also commented: ‘Europe remains a very important market for the UK cleaning industry, and every effort should be made to make the transition to a non EU state as smooth as possible.’
Commercial cleaning companies also fall within the business sector. There are more than 9000 cleaning companies in the UK, hundreds of which are in London. According to recent statistics, the cleaning industry has a market size of approximately £7 billion. The same statistics also show that the industry employs numerous migrants from other EU countries. In fact, one study showed that approximately 25% of the employees don’t have British nationality.
In comparison, the average of foreign employees in other British industries is below 18%. Moreover, recent results also point out that three quarters of the approximately 1 million immigrants that are currently working in the UK are working in low-skilled jobs.
Migrants in the UK Labour Market: An Overview – Migration …
migrationobservatory.ox.ac.uk
Effect of the devaluation of the pound
On the other hand, due to the devaluation of the GBP, which has plummeted from $1.5 to $1.32 in the past 30 days, causes inflation, as imports become more expensive and exports become cheaper. With the drop in GBP value, companies which rely on immigrant employees will also experience a hard time finding new employees. Moreover, inflation will cause higher levels of unemployment in the coming months, leading to less demand for cleaning services from potential customers. According to Mark Carney, an international expert economist, there is an increased risk of lower labour demands from companies and deferred consumption from customers.
Impact on freedom of movement
The fact that Brexit threatens to reduce the freedom of movement between the UK and the rest of the European Union, could lead to a decrease in employees and an increase in prices for everyday consumers. If and when the new post-Brexit regulations are put in place, it could lead to a disastrous effect on the commercial cleaning industry, not just for the companies, but for customers as well.
It really is too early to tell the full effect of Brexit. Only time will tell.
A smaller available workforce, the devaluation of the GBP, inflation, and the rest of the factors will eventually lead to an increase of prices for the average consumers, but also to an increase of costs for cleaning companies.