In the hours after the UK has decided to leave the European Union, businesses are tackling the question: “What next?”
The London stock exchange has perhaps predictably been rocked, down more than 8%.
Perhaps most notably for UK importers and exporters is the collapse of the pound, falling significantly against the euro and dollar.
This morning the Confederation of British Industry (CBI) raised business concerns and called for stability. Shortly afterwards, Prime Minister David Cameron announced his intention to stand down by October.
The Federation for Small Businesses has echoed the call for stability. National Chairman Mike Cherry said: “The events of the last 24 hours have been momentous and the effects have already been seen on the markets. Clearly the EU Referendum debate has been contentious, but we now call on the Government and all parties to bring stability for the business community.
The message wasn’t much different from The British Retail Consortium (BRC), which also called for reassurances from the government – fearing that a “prolonged period of uncertainty” for businesses, the economy and consumers alike.
Further reading on those responses:
The CBI statement in full: “Many businesses will be concerned and need time to assess the implications,” said Carolyn Fairbairn, CBI Director-General. “But they are used to dealing with challenge and change and we should be confident they will adapt.
“The urgent priority now is to reassure the markets. We need strong and calm leadership from the Government, working with the Bank of England, to shore up confidence and stability in the economy.
“The choices we make over the coming months will affect generations to come. This is not a time for rushed decisions.
“The CBI will be consulting its members and business is committed to working with Government to shape the best possible conditions for future prosperity.”
The Federation for Small Businesses statement: “The events of the last 24 hours have been momentous and the effects have already been seen on the markets. Clearly the EU Referendum debate has been contentious, but we now call on the Government and all parties to bring stability for the business community.
“FSB calls on the Government for clarity on what these decisions now mean for business, including how businesses will have access to the single market and the free movement of people and trade.
“Nearly a quarter of FSB members export, with the majority exporting to the single market. Access to the single market means access to 500 million potential consumers, more than 26 million businesses and is worth 11 trillion euros. We call on the Government for clarity on the impact to smaller firms who export wider afield through EU FTA agreements.
“These are crucial questions that need to be answered swiftly to ensure the UK’s 5.4 million small business confidence does not fall any further, which is already at the lowest levels since 2013.This includes clarity over the practical implications of this result on how smaller firms do business.
“FSB will continue to be a constructive partner in any upcoming negotiations, ensuring the voice of smaller firms is heard loud and clear.”
The BRC statement in full: “Now that a decision has been made to leave, it is important the Government moves quickly to explain the process of disengagement from the EU. Without clarity, retailers, other businesses and hence the economy will suffer from a prolonged period of uncertainty.
We are already seeing the commencement of a period of considerable volatility as financial markets react to any emerging information that might indicate how the new relationship to the EU might be shaped. Retailers should be prepared for the possibility of significant swings, particularly in the exchange rate and consumer confidence.
In order to keep prices down and to deliver the best possible choice for consumers, retailers’ top priority in the short term will be to ensure the continued ease and minimum additional costs of importing EU goods into the UK for sale to customers. A prolonged fall in the value of the pound will impact import costs and ultimately consumer prices, but this will take time to feed through. In its exit negotiations the Government should aim to ensure that the trade benefits of the Single Market (i.e. the absence of customs duties) are replicated in the UK’s new relationship with the EU.
However, it is important for us all to remember that, even if the government serves notice to leave the EU tomorrow, the process of leaving the EU will take a couple of years, during which time the UK remains a member and EU rules over free movement will continue to apply. Retailers will continue to focus on serving and delivering for their customers day in, day out in a highly competitive market as they do today.
In addition to goods traded with the EU, the Government will need to define the rules that will apply to goods traded with other countries. The BRC stands ready to advise them on this. In the slightly longer term, its important for the Government to explain how it will handle legislation that was previously the responsibility of the EU. This is likely to be a time-consuming and resource intensive process affecting a wide range of stakeholders. We are sure the Government will put in place a clear and effective process for consulting interested parties as it reviews these regulations. The British public has opted to leave the EU and it is now up to the Government in conjunction with our EU neighbours to make the most of that decision.”