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How Some Companies Are Getting Rich off Brexit

The pound is way down, London real estate prices have taken a hit, and ​the IMF just announced that Brexit threw "a spanner in the works" of the world's post-GFC recovery. Yet there are people out there making cash from the chaos.

Who wants to get rich off these guys? (via Flickr)

On Wednesday the International Monetary Fund announced that Brexit had "thrown a spanner in the works" of the world's post-GFC recovery, and plunged the UK's economic future into chaos. The IMF now believes the UK economy will grow 0.9 percentage points lower in 2017 than they'd previously suggested, which has since affected stocks and currencies everywhere.

But what's interesting is that right now, somewhere out there, someone is looking to make money from this chaos.

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Even before the vote happened, people were planning to cash in on Brexit. When the result came in and the shock took hold, news broke that George Soros made a small fortune by investing in certain European banks, effectively betting against the polling that said the UK absolutely would never vote to leave the EU.

Call it "creative destruction," or just call it good business, there is a dollar to be made in economic uncertainty, though exactly how someone may leverage the situation to their advantage in the coming months really depends on how the British economy fairs overall.

How bad this gets depends on three outcomes.

Best-Case Scenario

Britain ends up like Norway which is not a member state of the EU, but is closely associated with the EU, with access to the single market and allows free movement of people. Nothing much changes here, so there isn't much money to be made.

The Middle Option

This is a much more unlikely outcome, but this would see Britain ending up like Switzerland, which negotiates its trade deals with the EU on a case-by-case basis, but still has travel access to the EU. Same as the first option, we can only profit from a disaster if there is a disaster in the first place.

The Third, Worst-Case Scenario

Britain could end up as foreign to the EU as Brazil or Qatar. They broker deals in total isolation and Brits might potentially need visas to visit Europe.

At the moment the problem at is that even the heavies don't know how this is going to play out and so doing anything is dangerous.

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"The tone of the Financial Times this last week has been apocalyptic," said Simon Tormey of the University of Sydney. "At the moment the UK basically sells financial services to places like Italy and Germany without tariffs. [A worst case scenario] will make London a very unattractive place for the big banks and big international corporations to locate themselves."

While he didn't think a worst case scenario was a certainty, he said should it happen the best money to be made was either in selling to, or investing in, those companies about to move away from Britain.

"The ones who are licking their lips at the moment, are the European banks, the European stock markets, and they're just having a field day," said Tawney. "I've just come back from Europe and it's like looking at wolves eying a carcass. They're putting their bids into the big banks, saying come to Dublin, come to Frankfurt."

This means that anyone selling real estate in major European cities will be expecting to make a killing when an army of London bankers suddenly march on whatever major European city wins out and triggers a financial services boom.

Any EU city set to receive companies leaving London will make a buck. (via Flickr)

And given that the British pound has crashed, it has suddenly become cheaper for the world to travel to Britain, meaning tourism and creative industries like film making or game development will have their production costs lowered as property prices fall. Game development companies may want to exploit the skills of British games designers, while companies such as London's Pinewood Studios stand to lure more productions away from Hollywood. The rest of the world may just want to holiday in the British countryside.

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Mark Crosby from the Melbourne Business School also agreed that a worst-case scenario would be "catastrophic" for Britain in the long run and said that if a person were cynical enough to try to cash in, their best bet would be to look at British exporters.

"The only thing that is going to benefit from all this is the UK export market because the pound has fallen so far," he said. "In the case of UK exporters, you'd be buying options that would benefit when the pound rose."

London's docks. (via Flicker)

With a two-year lead time between now and whenever Britain may actually leave the EU, anyone who exports will be making a killing while the pound stays low. This means British manufacturers and primary producers will be doing reasonably well, so long as they don't rely on imports, which are about to get a whole lot more expensive.

This is only short term, however and Crosby doesn't think the worst-case scenario is all that likely.

"The UK can't be sort of screwed because that would be very bad for the EU, both sides would benefit from very sensible trade agreements," he said, emphasising that the EU makes up 53 percent of UK's imports, and 48 percent of its exports.

That said, if their recent track record is anything to go by, the British haven't been the most sensible people as of late and the fact they are entirely unpredictable makes any kind of certainty impossible.

Follow Royce on Twitter.