We take a look back at the months immediately following the referendum and what the ‘leave’ vote meant for UK businesses.
Despite economists forecasting a gloomy future post-referendum, consumer confidence doesn’t appear to have suffered, with the UK economy growing more than previously reported in the final three months of 2016, according to the BBC. Not everyone is immune from the Brexit wobbles though. Measures of confidence among businesses are clearly down as uncertainty persists around negotiations before they even begin. Investment in existing businesses is already slowing down. Figures published by the ONS (Office for National Statistics) show a 1% fall in investment in the last three months of 2016 compared to the three months to the end of September.
During the months after the referendum, many businesses across the UK expressed concern over the potential steep decline in annual profit that Brexit could bring.
Richard Branson cancelled a deal worth 3,000 jobs, stating: “We’re not any worse than anyone else but I suspect we’ve lost a third of our value, which is dreadful for people in the workplace.” The Virgin founder revealed that his own business plans were already suffering as a result of the Brexit vote.
The ‘ongoing instability’ in the UK economy had a direct impact on his decision to pull out of plans to purchase a UK-based company. And he warned that his wasn’t the only business re-evaluating business deals that were already in progress – suggesting that more proposed purchases, investments or mergers are likely to collapse amid the chaotic political and economic situation.
On the other hand banks, such as Barclays, who had prepared for the worst, found the post-referendum world was initially ‘business as usual’.
“We had a crisis leadership structure in place, we stood down yesterday. Banks are continuing to operate pretty much as normal, and we should feel good about that.” Steven Cooper, head of personal banking, reassured markets and customers that it is no longer in crisis, despite falls in banks’ share prices after the vote, reported The Telegraph in July 2016.
The pound weakening was arguably the most significant and immediate change following the Brexit vote. Since the result the pound has dropped noticeably, trading around 15% lower than the dollar and 12% down on the Euro.
Sterling is likely to remain volatile in the coming months until there’s greater clarity about the UK’s Brexit deal, according to currency strategists. But, despite the plummet in the pound, of 1,300 companies surveyed by Company Check at the end of 2016, more than 50% said that Brexit had had no effect on them so far.
While high street banks were setting a reassuring tone, the bigger international investment banks which have established London bases to take advantage of ‘passport’ access to the European Single Market and generated significant tax revenues for the Treasury in the process, began implementing contingency plans. Goldman Sachs and Morgan Stanley plan to move to the mainland Europe in the coming years.
Amidst all the uncertainty, some businesses are putting off major decisions until they can get more clarity about Britain’s future, reports The New York Times.
James Dyson, the innovative entrepreneur who established the high-end British vacuum cleaner company that bears his name has seen a sharp increase in profit for his company since the decision to leave the EU. He believes it signals a trend for British companies.
According to The Telegraph, statistics indicate that more people have been going it alone in business since the referendum. Analysis of UK user date by LinkedIn post-referendum found a 5% growth in the number of micro-businesses. So, it’s safe to say that, whilst the future remains uncertain, business confidence hasn’t wavered significantly, or at all for that matter.