Brexit and US-UK relations: A new digital trade and cybersecurity agenda

With the perspective of two weeks’ hindsight and reflection, a number of questions relating to the impact of Brexit on the US-UK digital trade and security agenda are coming into focus — but many consequences, intended and unintended, remain uncertain. What follows are preliminary observations on the economic and strategic implications of the momentous British decision.

Expect a big impact on digital trade and foreign direct investment

On a purely commercial level, the steep decline in the value of the British pound (around 12 percent currently) will curtail British shoppers’ appetite for foreign goods and services. British consumers are long accustomed to buying on the Internet: over 50 percent made at least one online purchase from a non-UK website last year (US websites were by far the most popular outlets). Over the longer term, if Britain does leave the EU, cross-border sales by US web merchants will become more complicated. For instance, at this point, purchases from the US are eligible for Prime shipping through any Amazon consignment center to any place in Europe. But when the UK departs the union, such purchases will have to be sent separately to that country.

Further, there are many open-ended questions regarding foreign direct investment and financial services in the UK. Vodafone, the giant British telecoms company, has already signaled that it iscontemplating moving its headquarters to the continent. Some big US banks such as JP Morgan and Goldman Sachs are already planning to move some operations out of London. Still, other large multinational corporations have offered reassurances that they intend to stay put and will wait until the dust settles before making any big decisions related to business operations, given London’s business-friendly, technologically advanced market conditions. Read More….