Last week, the UK’s referendum delivered a historic vote to leave the European Union. Since then, political uncertainty and market fluctuations have ensued. As the dust began to settle, Criticaleye spoke to a number of executive and non-executive directors to get their views on the recent turn of events.
“Many business leaders were surprised by the decision 51.9 per cent of the UK population took to leave the European Union. Even those that penned intricate contingency plans will now be in a period of uncertainty. What’s needed now is strong leadership and a calm, considered, long-term approach,” says Charlie Wagstaff, Managing Director at Criticaleye.
While predictions are difficult to make, it’s important to assess the situation. As such, we spoke to a number of executives, non-executive directors and advisors to get their thoughts on the forthcoming Brexit.
Steven Cooper, CEO for Personal Banking at Barclays
There is a lot of speculation about the impact of the vote on our industry. Our job is to be there for our customers and ensure our colleagues feel calmly supported – that’s exactly what we’re doing.
The business did contingency planning for either outcome and thank goodness we did because I don’t think many imagined it would come out the way it did. That planning has enabled us to respond without panic and provide reassurance to customers and colleagues.
This is a time for rational decision-making, calmness and focusing on the fundamentals of your business, not getting distracted by short-term volatility. We don’t yet know what leaving Europe actually means and it could be quite a long process.
We’re tracking things like call volumes on the hour. We’ve seen record levels of stock trading but there’s been no additional activity in branches or call centres – people aren’t calling up more or asking for more cash. We were prepared for that but it hasn’t happened.
It’s likely that the UK will go into a modest economic downturn for a reasonably short period of time. Have one eye on it but don’t be distracted from the day-to-day running of the business.
I think there will be some opportunities from this; for example some people are taking the current market positon as a buying opportunity.
I’m not surprised at the decision, I think the Remain campaign lacked conviction and inspiration, UK governments have been constantly critical of the EU so naturally citizens have grown to believe it’s not a club we should stay in. I’m very sad about the vote as I think the ‘EU project’ has broadly been a force for good.
In terms of the organisations I am involved in, leaving the EU could have a dramatic impact on the freedom of lawyers and law firms to operate across Europe. It could also make cross-Europe co-operation between law enforcement organisations harder.
On the other hand, if we come out of the single market it might be easier to control the movement of criminals into the UK, and reduce the numbers of homeless or jobless people who come from poorer EU countries.
Whatever happens next will take time and the period of uncertainty in the short term could damage public confidence. No one actually knows from experience how to exit the EU, or even what it means.
The referendum is a democratic imperative, not a legal one. In theory the Government could ignore it. If I were still a civil servant, I would advise the Prime Minister to take their time negotiating positive arrangements for our withdrawal, and then get Parliament’s and the country’s agreement before triggering Article 50 of the Lisbon Treaty.
I feel some shock [at the referendum outcome] but nobody really knows where this will go.
There are many questions. Will the UK remain in the single market? Will Scotland want independence from the UK and to remain in the EU? Or will the exit negotiations be so horrible that the UK Parliament votes to reject them, triggering a General Election and perhaps a new referendum? Anyone got a crystal ball?
My fear is that investment from Asia will significantly reduce. Asian companies have always seen the UK as a good place to do business, in particular as it gave full access to Europe.
The organisations I’m involved with haven’t made extensive plans. There are no real guidelines or ideas of what the future will look like. So, all you can really do is hunker down and be cautious while carrying on.
In terms of advice to others, I would say prepare scenarios for a number of business cases… full access to EU market, significant trade tariffs, or look to alternative markets. Finally, it is what it is and life goes on.
Simon Warr, Communications Director at National Air Traffic Services (NATS)
Personally, [I feel] disappointed and worried about what Brexit will mean for the country in the years ahead.
The relevant teams [at NATs] examined the voting scenarios and ramifications as far as they could. This was discussed at both executive and board level and where appropriate, contingency plans were put in place.
There will be little immediate effect on the business, apart from any potential impact the economic shock waves will have on air traffic volumes, although these are largely covered through risk sharing mechanisms in our licence.
The longer term will depend entirely on the future relationship the UK forms with the EU and, in particular, whether the UK continues to adhere to the requirements of the EU’s Single European Sky legislation [EU legislation to improve air traffic] as this determines much of what we do.
It will be some time before we can complete a proper assessment. In the meantime, we will maintain dialogue with our customers, regulator and the Government on the options for the future of air traffic control outside the EU.
In the short term the impact is uncertainty; people will stop investing and growth will slow down, especially in the UK but also in Europe.
I think the next Q4 and next year’s Q1 will be difficult for UK companies. For international businesses, I think those that have used the UK as their European headquarters will rethink whether or not they want to stay in the UK. For example, Chinese organisations saw London as one of the best places to invest because they wanted to be within the EU. Now they will decide between France, Germany and other places.
Businesses looked at the impact of leaving the EU and had contingency plans, but they were for an orderly world. People are now realising that Brexit has created a political and an economic crisis. Nobody expected David Cameron to step down so quickly; there are lots of decisions that will be postponed until there is a new Prime Minister in place.
At SIG we signed a refinancing contract that was cleared just before the referendum results. [I suspect in future] there will be a problem of liquidity, which at some point might impact on borrowing and the ability to refinance.
There is a lot of noise but people should just continue to run their business and focus on what they can control.
Sally Shorthose, Partner at international law firm Bird & Bird
I don’t think businesses are completely prepared for this eventuality. Even for the leaders of the Remain and Leave campaigns, it was not the result they expected. Of course, the implications could be very far-reaching.
Clients have been asking if they should make allowances and changes to prepare for Brexit. Actually, we’re having to think quite carefully when drafting agreements about a number of things – for example, references to directives and regulations [as] they are likely to fall away in the next few years. Care will also need to be taken in defining the ‘territory’ and with choice of law and dispute resolution clauses to ensure that these survive Brexit, and are even flexible enough to include a broken up UK.
In due course, I would suggest a review of IP portfolios to see if any action needs to be taken – but we need to see what is proposed regarding European Union Trademarks (EUTMs), Community Registered Designs and of course the future of the Unified Patent Court (UPC).
We’ve had a dedicated Brexit [team internally] here at Bird & Bird for about six months; I think it’s very useful [for businesses to] have key people who keep abreast of what’s happening. It’s likely things will change quickly and decisions need to be made. Those people could have a job for much longer than first anticipated.
Do you have a view on Brexit that you would like to share? If so, please email firstname.lastname@example.org