Now that parliament has returned and we start to see reality setting in following the vote, there has been a lot of discussion around what effect the recent EU deliberations will have on immigration, jobs and the political set up of the country.
We have seen the cracks between political parties widening, with differences of opinion within the Labour Party, the Lib Dems proposing a second referendum, UKIP starting to condemn the fact the government hasn’t acted, and a number of different parties within the government as a whole arguing whether “Brexit actually means Brexit”.
However, no official decisions have been made as of yet, so at this time it’s impossible to say what will happen. In contrast, there are a few interesting discussions happening on the global stage that could be perceived as positive or negative. There was a big G20 summit in China, where we were told we cannot jump any queues in terms of trade deals, whilst conflicting positive news came from Australia, who are very keen to become close trading partners. This demonstrates that while countries are keen to work with us, our recent leave decision means we will be in a queue behind other EU member states.
There has also recently been an EU summit in Bratislava (the first EU summit we haven’t attended in 40 years), and while Brexit was not officially on the agenda, it inevitably became a part of the discussions on the future of the EU. There seemed to be a lot of disagreement between individual states who want less EU power, and Juncker, who wants more EU power – more control over trade tariffs, defence budgets etc. This suggests a rift in the EU itself, which may position it as a weak trading partner due to lack of agreement and coherence, hence the difficult ongoing negotiations with both EU and non-EU countries.
The good news is that as nothing has actually happened yet, business in the UK is continuing at a steady pace. In fact, our economy is still better than the EU’s. Looking on the bright side, the drop in the pound is helping the manufacturing industry, boosting exports and encouraging a flourishing tourist trade – so this limbo period is probably helping our economy. The Organisation for Economic Co-operation and Development has just announced that growth post-Brexit is better than predicted, and has actually raised its GDP estimate. The Office of National Statistics has released a similar statement. It’s now just a matter of waiting for some hard facts on what our Brexit terms are.
Whatever terms we agree on, there will probably be a short-term hit on the economy, but, if the correct decisions are made, there should also be long term benefits. We hope that decisions are made by the end of the year so that businesses know how to prepare.
Thankfully, now that the government is more stable, what we are starting to see is decisions being made about important UK projects like the Hinkley nuclear power station, which was previously held up by elections, independence votes and the referendum. Hopefully other economy-boosting agreements will follow, such as the new Heathrow runway – long-term projects that will help us through the short-term instability.
The other key news story at the moment is the American elections. I was in the US last week at our New York office, and there was a definite air of familiarity to the EU referendum - while polls would lead you to believe there was no way a leave vote could win – it’s the same with Trump. There’s lots of disbelief in him winning, but a lot of contested issues too that favour him and his political narrative, such as immigration and job availability. I think there’s a good chance that Trump could win the election, but it’s very difficult to say what this would mean for Brexit, or for that matter the world economy. Businesses should prepare themselves for a very surprising outcome in the next few months, unfortunately coming straight off the back of the EU referendum.
As for our industry - I’m happy to report no drop off in trade in general. Actually, there’s been an increase in business as of now – things are running along nicely without much effect on recruitment. We’ll be waiting for the next budget to get some understanding of the government’s economic plan in relation to any fallout, or for that matter opportunity, from the vote leave result.
This currently leaves a lot on the table for the future of the EU, Britain and most likely the world economy. The coming months and years will reveal a lot about our future, but thankfully, for now at least, we’re safe.