MRO Magazine

Canadian businesses, economists weigh the impact of Brexit vote


June 24, 2016
By The Canadian Press

Toronto – Canadian businesses, investors and economists confronted the prospect Friday of one of Canada’s biggest trading partners exiting the European Union and what it will mean for their operations and the economy at large.

“The U.K. is one of Canada’s top trading and investment partners, however the small relative size of these relationships points to a muted direct effect on Canada’s economy,” RBC Economics said in a note to clients.

Nonetheless it warned there could be a “return to risk aversion in financial markets is expected to put downward pressure on oil prices, government bond yields and the Canadian dollar.”

The Canadian company that runs the Nectar loyalty-points program in the United Kingdom says it doesn’t expect the Brexit vote or the weakness of the British pound to have a significant impact on its financial results in the medium term.


But Aimia Inc. says it does expect a period of uncertainty in the near term as a result of the vote, which resulted in a defeat for the forces that want the United Kingdom to remain in the European Union.

The Montreal-based company runs the Aeroplan loyalty points program in Canada and similar programs in several other countries, but says the Brexit decision will have the biggest impact on its Nectar program in the United Kingdom.

“Aimia has limited financial exposure in EU countries outside the U.K.,” the company said Friday morning, a few hours after the official results of the vote were released.

The “Leave” side won 52 per cent of the vote, over the objections of British Prime Minister David Cameron – who has announced he will resign.

Aimia has 3,200 employees in 17 countries. It partners with banks, retailers and other company to generate, collect and analyze customer data that can be used to make business decisions.

Winnipeg-based Great-West Lifeco – one of Canada’s biggest life insurance companies – said earlier Friday that its European businesses “are resilient and we maintain significant financial flexibility.”

The company’s Canada Life operation has had a presence in the United Kingdom since 1903. Other Great-West Lifeco units operating in the European Union include Irish Life in Ireland.

Great-West Life shares were down about 3.5 per cent at C$34.44 shortly after the Toronto Stock Exchange opened. The TSX finance index was down 2.6 per cent overall.

Aimia shares (TSX:AIM) were down 2.4 per cent or 20 cents at $8.

The British vote to exit the EU had an immediate impact in the financial world, with the British pound plunging to its lowest level in three decades and world stock prices falling.

News from © Canadian Press Enterprises Inc. 2016