BRITAIN LEAVES. CAMERON RESIGNS. CARNEY REASSURES

EU Referendum FINAL RESULT:  
52% Leave   48% Remain

Analysis by HubLondon, a division of Headland Consultancy.

The pundits didn’t predict it.

The political establishment couldn’t believe it.

Big business did everything it could to try to stop it.

But with Brexit moving from a risk to a firm reality, everyone is now urgently assessing the scale of the seismic political and economic shock.

“The will of the British people must be respected” said David Cameron, as he announced his departure. A new Conservative leader will be chosen by October.

Bank Governor Mark Carney says contingency plans are in place and the bank “will not hesitate to take additional measures”.

HubLondon at Headland Consultancy is here to help international businesses operating in the UK with the communications implications of this historic vote. If you have any questions about how this referendum may impact your PR, stakeholder or investor communications, then please contact sburton@headlandconsultancy.com

WHAT BREXIT MEANS FOR INTERNATIONAL COMPANIES

  • The City and financial markets will be volatile in the medium term – Brexit implications, the opportunities and risks arising will be high up on investors’ agendas
  • This story will dominate the UK-based media for months, not just weeks – any news international companies wish to communicate in London will inescapably be viewed through this Brexit prism. All communications planning will have to factor this in.
  • Politics in the UK will not be business as usual – do not expect significant regulatory or legislative decisions in the next 12 weeks
  • Consumer reaction is more difficult to predict but increases in retail confidence and spending are unlikely. How consumers start to view international companies and brands could start to change. Headland will be tracking this

THE COMING HOURS

  • Financial market stability will be the immediate priority for the Bank of England and the UK Treasury – with sterling-denominated assets under pressure
  • The Bank of England has made substantial additional liquidity available to UK financial institutions, with Carney making a live TV appearance to reassure investors
  • Cameron will stay for around 3 months to provide some stability. Cabinet ministers are likely to remain in their jobs until a new Conservative leader takes charge
  • The party leadership contest effectively starts immediately, with Boris Johnson, Theresa May and Michael Gove all possible candidates
  • No immediate decision will be taken on invoking “Article 50” which begins a two-year withdrawal negotiation. The decision on timing will be taken only once a new leader is in post
  • The international focus moves quickly to Spain – with general election being held there on Sunday
  • An emergency summit in Brussels will be convened in the coming days to consider the impact of the vote on the future of the EU

THE FIRST WEEKS

  • The emergency Brussels summit will reveal some of the battle-lines between those EU countries wanting a positive process of negotiated Brexit and those favouring a more punitive approach towards the UK
  • The candidates for Conservative leader will emerge, with a clear timeline established for the election
  • Markets will settle, but volatility is likely to continue with great uncertainty over the timetable and process for EU exit
  • Business news outlets will focus on the impact on investments and for different sectors of the economy, almost to the exclusion of all other company and financial news

 THE FIRST MONTHS

  • By the autumn, the UK government – under a new Prime Minister – will decide whether to trigger the Article 50 process for withdrawal
  • A decision may also follow on whether a general election also needs to take place in the UK
  • The full scale of the task for civil servants and diplomats will become clear: unravelling tens of thousands of pages of EU agreements
  • A decision will probably be taken in the autumn on whether to try to stay in the single market (but outside the formal EU) or negotiate a separate trade deal with the EU
  • Pressure may now be growing in some other countries to hold their own EU membership referendums, and core EU countries are likely to unveil a plan to reform and renew the EU

 THE YEARS AHEAD

  • How long the process of Brexit takes has been a subject of fierce debate – any deal will have to be agreed by a majority of remaining EU countries within two years (once Article 50 is triggered) and ratified by both the European and UK parliaments
  • Short-term financial turbulence may settle. The shock to confidence, though, will probably have had a real economic impact, at least in the short and medium term
  • Elections are due in 2017 in both France and Germany – with Brexit a major campaign theme in both contests
  • There will be a battle to secure the City of London’s position in the global financial order, with other financial centres – notably Frankfurt – moving to capitalise on Brexit
  • New political alignments are likely with Conservative and Labour party rifts over Europe and immigration unlikely to be easily healed. The result is a blow to the progressive wings of both parties
  • A second referendum on Scottish independence becomes highly likely

THE PRIORITIES FOR INTERNATIONAL BUSINESSES OPERATING IN THE UK:  

  • Up-to-date and trusted commentary and analysis of the Brexit process
  • Managed corporate communications to protect UK commercial interests during the withdrawal
  • Advice on PR activity to reassure UK customers, investors and stakeholders in the months ahead

For more information, please contact sburton@headlandconsultancy.com