A brief summary of the Brexit so far - 30/01/2017
In an unexpected turn of events, citizens of the U.K. voted “leave” on a referendum to disengage with the European Union.
The impact of this decision was felt immediately, with the British pound dropping sharply in the moments after the results were revealed.
To understand the implications of this vote, one must know that the terms U.K. and Britain are often used interchangeably, although the official title of the nation is the United Kingdom of Great Britain and Northern Ireland. To make this a little more confusing, Great Britain consists of three countries: England, Scotland and Wales. With this knowledge, one gets a better understanding of how the votes in each region reflect the whole nation.
The leave campaign secured nearly 52 percent of the vote with 17,410,742 ballots cast, while the campaign to remain only managed slightly above 48 percent with 16,141,241 votes. Wales and England – with the exception of London – were strongly for the Brexit. Scotland and Northern Ireland overwhelmingly voted to remain, meaning these two countries will be removed from the EU against their will.
Following the results, British Prime Minister and Conservative Party leader David Cameron announced his resignation, stating his replacement would be appointed during the beginning of the Conservative Party conference in October. This adds a three-month delay to the negotiation of Britain’s exit. According to Article 50 of the Lisbon Treaty, the nation has two years to negotiate its departure. However, Cameron expressly stated Article 50 would not come into play until the new Prime Minister is appointed. Still, a joint statement released by European Council President Donald Tusk, European Parliament President Martin Schulz, current Council of the EU President Mark Rutte, and European Commission President Jean-Claude Juncker called on the U.K. to apply the affects of the Brexit and leave the EU as soon as possible. Tusk stated that until that happens, however, all EU rights, laws and obligations will still apply to U.K. citizens.
Businesses in the U.K.
The majority of Britain’s business professionals voted to stay in the EU and expressed concern over the nation’s economy and jobs. Some organizations, such as JP Morgan, have already announced they plan to relocate jobs due to the vote’s outcome. Morgan Stanley in particular plans to shift 2,000 positions to Frankfurt and Dublin. If other businesses continue this trend of leaving the U.K. for the greater economic benefits of the EU, both London and the nation as a whole could experience severe economic consequences.
Trade organizations and businesses that haven’t yet decided to leave are expressing the need for both clear thinking and government action. Mike Cherry, chairman of Britain’s Federation of Small Business, demanded the U.K. establish new resolutions designed to protect small businesses. Carolyn Fairbairn, director general of the Confederation of British Industry, wants the Bank of England and the British government to collaborate and work toward restoring faith in the economy.
Additionally, the vote has led to questions regarding company organization requirements for businesses in the U.K. Numerous regulations may change for U.K.-based businesses now that the region will no longer fall under the auspices of the EU.
Overall, the unexpected Brexit brought a plague of uneasiness to British citizens, business owners and financial experts. Organizations working internationally must continue to monitor this situation to see how this outcome affects their operations.