Brexit and the boardroom - British firms will not rush to judgment on Brexit

Business, which was largely for staying in the EU, tries to remain stoical in the face of Brexit.

DIRE warnings about job losses and companies fleeing abroad were at the heart of the Remain campaign’s doomed effort—so much so that Brexiteers often mocked the strategy as “project fear”. Car companies such as Nissan and BMW expressed an especially strong desire for Britain to stay in the EU, and it was often assumed by Remain supporters that this meant they would relocate to continental Europe (or elsewhere) in the event of a Brexit. Now the dreaded moment has come to pass, is anyone stampeding to the door?

Not yet, is the short answer. The financial sector is considered to be most vulnerable to a Brexit, and there were rumours going around hours after the referendum vote that Morgan Stanley, an American investment bank, was moving 2,000 staff to Frankfurt or Dublin. Those rumours were later denied by the bank, which instead insisted that it was only monitoring developments “very closely”, and will “adapt accordingly”. Indeed, this seemed to sum up the business attitude to Brexit: rather than taking any hasty, rash decisions, they will play a long game.

Thus, Jaguar Land Rover, which is owned by Tata, an Indian conglomerate, said it would “manage the long-term impact and implications of this decision: nothing will change for us, or the automotive industry, overnight.” BMW said that although there “will now be a period of uncertainty, there will be no immediate change to our operations in the UK.” Airbus, a European aerospace consortium that has considerable interests in Britain, said merely that it would “review our UK investment strategy”.

A post-Brexit Britain offers such investors both advantages and disadvantages. The abrupt fall in the pound should help exporters, including the car industry. But firms will not welcome tighter immigration rules. And half of Britain’s exporters rely on imported components, which will become more expensive.

Much will depend, of course, on how successful the new prime minister is in negotiating access to the EU’s single market. Business abhors uncertainty, and so all Britain’s business groups have been urging the government to get on and clarify Britain’s new relationship with Europe, and indeed the world, as soon as it can. The Confederation of British Industry, the largest employer’s grouping and one of the principal cheerleaders for the Remain campaign, said today that “business is good at getting on with things.” But are the politicians? 

source The Economist, Friday, June 24, 2016