So, after weeks of campaigning the votes have been counted, the electorate has spoken and the U.K is to leave the EU. For some this morning there is jubilation whilst others are shocked as, although the polls called it as a close run thing, the markets did not seem to actually believe that we would exit.
This move is, of course, unprecedented and the only thing that’s certain at the moment is that there will be a great amount of uncertainty ahead. Already the value of sterling has plummeted with GBP/USD opening this morning at 30 year lows at $1.34, a fall of over 10% from where the pair was trading last night with further sterling weakness also showing in the EUR/GBP. Stock markets are also reacting to the result with the Nikkei closing down over 8% overnight and the FTSE 100 expected to open sharply down this morning.
So what does this mean for UK business?
Europe is still our largest trading partner and therefore an important part of our economy. With the U.K. having two years from official notification of our intention to leave to negotiate our exit, the basis for future trade deals will become an important aspect, both in terms of exports and employment. But during that time there will be a period of uncertainty for businesses currently exporting as any change to trade terms, tariffs, etc will effect their profitability and competitiveness, either for better or worse. Businesses looking to expand via export are likely to be more reticent and hold back until the state of the playing field is known thus restricting investment in the short term.
Closer to home, with Scotland and Northern Ireland voting to stay in the EU, there is already speculation around a further referendum on Scottish independence, and the possibility of a united Ireland with the various implications that brings on national borders as well as social and political change. The future is now unknown with business owners having to make strategic decisions with little concrete fact available.
As always we are here to support you and as the old saying goes…. “Keep calm and carry on”.
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