The public has expressed a preference for Britain to leave the EU and we must now work on the basis that the UK will be exiting the EU and potentially the single market some time before 2020.
While on the surface nothing structural has changed yet, the immediate effects of the vote have been widely felt. Sterling hit a 31 year low against the dollar and the FTSE suffered an immediate drop. The market rebounded but some of Britain’s largest companies continue to feel the brunt of foreign exchange volatility. GDP growth forecasts are less positive and inflation is set to rise.
The devalued pound will make life more expensive for all of us and puts immense pressure on those businesses that rely on imports. There is always an upside however and for those who export this could well be a period of opportunity.
We are facing a period of unprecedented uncertainty whilst our political leaders determine how to approach the situation. Even when Article 50 is invoked it is unlikely there will be much clarity as there will then be a period of extended negotiations.
In the meantime, we must all prepare for a world where the UK is outside the EU in some way, a challenge which applies not only to UK businesses operating within the EU but also to those EU businesses with activities in the UK.
In terms of the coverage and service QBE provides our customers, it is business as usual while the UK remains a full member of the EU. In the background however we will refine our contingency plans as negotiations evolve, particularly with regard to passporting to ensure we maintain full continuity of service whatever occurs.
The aim of this report is to help businesses navigate through the uncertainty. Whilst we cannot map out every implication within every business sector in the UK, we can provide a guide how to create your own ‘impact map’ for your business, and also give some guidance around the likelihood and the effects of the multiple outcomes that are now under consideration.
Risk Managers have a critical role to play during Brexit planning. Risk management teams will be working on the front line alongside CEOs, COOs, CFOs and Boards to model and plan for Brexit.
This paper is a follow up to an original document, What Brexit means for business, published in April 2016. That document was based on a series of interviews with experts in a variety of fields; from law, accountancy, regulation, insurance and economics, and it is their expertise that has supported the writing of this piece and that you will find summarised below. As ever, in a highly uncertain situation, most of what is included here remains opinion, rather than proven fact, and should be read in that light.
Chief Executive Officer, QBE European Operations