2.2.2 therefore, this is the reason why Brexit

Impacts on doing business of US firms in London

mentioned above, the United States of America is the largest trade partner with
the United Kingdom; therefore, this is the reason why Brexit has made up huge
impacts on not only the UK’s economy but also American economy, especially
doing business of US companies and enterprises based in London.

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to the report “Economic Implications of a United Kingdom Exit from the European
Union” published in July 2016, James K. Jackson and Shayerah Ilias Akhtar
claimed that the UK was also the second largest partner of the US in terms of
foreign direct investment (FDI) and goods trading as well. A good example that
these two specialists in International Trade and Finance pointed out is there
were approximately $600 billion FDI in the UK in 2015 came from the US,
including two main aspects: finance and insurance and holding companies.
Moreover, 22% of total US corporate assets abroad were collected from British
market. From these figures, the role of UK in development and expansion of US
businesses is undeniable and this illustrates why large-scale companies and
enterprises of American attempt to have their headquarters or offices be
located in the City of London which consists of a wide range of advantages like
human capital resources, infrastructure, and rules of law for business, .etc.

The result of referendum in Great
Britain has had significant influences on the operation and activities of US
firms. First of all, they have to face up with difficulties in expanding their
markets because the strategic goal of US companies to do business and trade
with the United Kingdom is to access to another one which is known as the
single market of European Union – the largest, wealthiest and most important
foreign market in the world to them, according to a report commissioned by
American Chamber of Commerce to the EU in March 2017. Furthermore, Brexit could
potentially reduce revenue of these enterprises and put at risk £500bn that US
firms invested in London (James K. Jackson and Shayerah Akhtar, 2016). Another
impact is related to some changes in strategy of these firms in order to adapt
to the situation. Two possibly main changes are restructuring their companies
and relocating their headquarters outside London. According to the research
“Brexit: 40% of US firms with British offices are considering relocating to the
EU” in December 2016, Zlata Rodionova pointed
out that US firms had been trying their bests to find a way that helps them do
business directly with the EU without the appearance of the UK. Indeed, some
companies working in specialized fields like food and beverage, life sciences
and financial services were most likely to consider relocating. An interesting
point is that Paris is among a number of European cities seeking to these firms
assessing a move away from London to maintain their access to EU markets, and
faces competition from Dublin, Frankfurt and Luxembourg, among

Besides these impacts analyzed above, it is crucial to
examine reactions of US enterprises based in London towards the decision to
leave. On the opposing side, a significant case is Caterpillar. It is a giant
company focuses on manufacturing heavy-equipment, its production lines and
facility are located in Great Britain, and this has created 9,000 jobs for both
American and British people. According to the leaders of this company including
the chairman and the executive officer, demonstrated the dilemma that American
businesses in Britain have to face up with and also potential effects of the
referendum, they claimed that it would be better for the UK to stay in the
single market.

In addition, other large-scale U.S. businesses made much
more efforts to show their viewpoints. For example, a division of Ford in the
United Kingdom sent a letter to its 14,000 employees so as to emphasize
the importance of maintaining stability and to prevent disruptions in trade.
Wall Street’s biggest banks like Goldman Sachs, J.P. Morgan and Morgan Stanley,
drew up a report to prove hundreds of thousands of dollars donation to
Britain Stronger in Europe – the leading campaign to remain. A survey by
British American Business found that 70 percent of its members thought a
Brexit would damage their operations or future investments.

contrast, from the perspectives of US companies that supported Brexit, the EU
regulations have constrained the innovation and competitiveness in City of
London, this also a little bit influences on their businesses. Their reaction
to Brexit was represented by a letter supporting an exit with the signing of
250 business leaders.


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