What Brexit means for managers
The Brexiters have won the EU referendum. How will managers and CMI members be affected as the politicians begin to negotiate the terms of our withdrawal from the union?Matt Scott
On June 23 Britain was asked to have its say on the future of this country in the European Union and, in one of the biggest democratic decisions in British history, the country has voted to leave.
Prime minister David Cameron has announced his intention to step down to allow a new prime minister to lead the exit negotiations.
But what does Brexit mean for managers leading organisations up and down the country?
An uncertain future
The first thing it means is uncertainty.
The value of sterling and the stock markets have crashed as investors seek calmer waters, with the price of sterling falling to its lowest levels since 1985 and the stock market falling more than on Black Monday in 1987.
For now, uncertainty is certain. Even prominent Leave campaigners are unsure as to what will happen now the votes have been counted.
This is unchartered territory, with a lot depending on what deals the UK government can secure in terms of the free movement of people, trade tariffs and other agreements that were secured as part of membership of the EU.
And it remains to be seen which laws from Brussels will remain as part of the British legal system and how Britain can trade with its European neighbours.
Many economists have predicted a return to inflation as a weak pound pushes up the price of imports and potential trade tariffs make it more difficult and expensive to trade with the Continent.
All of this has led many to speak of fears of another recession; others have suggested that climbing interest rates could make Britain more appealing to investors seeking higher returns, boosting the economy.
Governor of the Bank of England Mark Carney said this morning that the Bank would assess the developing situation and adapt to support British financial stability, reassuring investors that Britain would remain resilient and strong in the face of the “biggest domestic risk to financial stability”.
A radically different workforce
The victory for the Leave campaign might be expected to also lead to changes in the makeup of Britain’s workforce.
With migrants accounting for around 12% of jobs in the hospitality sector and about 9% in manufacturing, companies could soon be facing a shortage of affordable workers.
Last year alone more than 200,000 new jobs were filled by EU migrants, and doubts prevail about whether the job market, with unemployment at a decade-long low, has enough capacity to plug the gap if this migration is limited.
The fall of another Union and friends reunited
Another knock-on effect from Britain leaving the EU is what the result means for the future of the United Kingdom.
Scotland overwhelmingly voted in favour of Remain in the referendum, with 62% wanting to stay in the EU. But with the country being forced out of the EU with the victory for Leave, Nicola Sturgeon has already started plans for another vote for Scottish independence.
The fallout has even stretched as far as Northern Ireland where, with 56% of the country voting to remain, there has even been talk of a re-united Ireland forming in the near future.
All change at Downing Street
While Prime Minister David Cameron said he was ‘proud’ of the power of democracy demonstrated with the referendum, his failure to win the vote for Remain made his position untenable and shortly after the announcement of the result of the referendum he announced his own intention to resign as prime minister.
“I fought this campaign in the only way I know how, which is to say directly and passionately what I think and feel: head, heart and soul,” he said. “I held nothing back. I was absolutely clear about my belief that Britain is stronger, safer and better off inside the European Union and I made clear the referendum is about this and this alone, not the future of any single politician, including myself.
“But the British people have made a very clear decision to take a different path, and as such I think the country requires fresh leadership to take it in this direction. I will do everything I can as Prime Minister to steady the ship over the coming weeks and months, but I do not think it would be right for me to try to be the Captain to steer our country to its next destination.”
“Although leaving Europe is not the path I recommended, I am the first to praise our incredible strengths,” he added. “I’ve said before that Britain can survive outside the European Union, and indeed that we could find a way.
“Now the decision has been made to leave we need to find the best way, and I will do everything I can to help. I love this country and I feel honoured to have served it and I will do everything I can in the future to help this great country succeed.”
This means that in addition to the uncertainty in Europe there is also uncertainty in Downing Street.
Cameron has said the legal move to formally withdraw from the EU, invoking Article 50 of EU legislation, will be left to his successor and the start of the Conservative party conference in October.
While this will provide much needed stability at the top following on from the seismic shock brought about by Brexit, the party leadership elections needed before the identity of the next prime minister is known mean that uncertainty will be the leader of the Tories until more clarity can be found.
Some have even said there could be a general election as early as this Autumn as voters voice their discontent at a government being headed up with an un-elected leader.
Uncertainty will be the order of the day for many, many months to come…