South West reaction to the EU Referendum

By Anita Jaynes on 24 June, 2016

A number of South West businesses have given their reaction to the EU Referendum result, in which the UK voted to leave the union.

Phil Smith, managing director of one of the region’s most influential business leadership organisations, Business West said:

“After a long and often acrimonious campaign the UK public has chosen to leave the European Union. This is a historical decision.

“It is vital that the government now sets out a clear plan for what leave looks like. This must include a commitment to negotiate for full or equivalent access to the European Single market – the UK’s largest export market.

“Many South West firms export to the EU, are part of pan European supply chains, rely on skilled European labour or depend on foreign investment due to the UK’s position in the single market. These firms need clarity as quickly as possible about the UK’s future trading relationship with Europe. Without clarity there is a danger that investments will be put on hold, plans for new plant, new jobs and new expansion will be frozen.

“Government must set out what its negotiating time frame is; how negotiations around future trade relationships will go alongside withdrawal from the European Union and give clear reassurances around the quality of market access it seeks to achieve. The aim of the negotiations cannot be to raise the drawbridge to either Europe or the world. Equally fears over migration cannot be allowed to trump the UK’s economic interests.

“Eyes will now turn to the financial markets, with the value of sterling and shares already falling. The Bank of England and the government need to reassure consumers, businesses and investors that it is ready to steady the ship and prevent damaging fall out from market uncertainty.

“Above all the government must do its upmost to stop this process creating years of political and economic uncertainty which will negatively affect businesses from the smallest to the largest. This calls on politicians of all parties to rediscover statesmanship and negotiate what is the biggest change for the UK since the end of the Second World War.”

Discussing the impact leaving the EU will have on the automotive industry, Malcolm Miller, managing director of Chippenham-based automotive learning and development agency RTS Group said: “The Brexit vote, far from resolving economic concerns will, we believe, create further economic challenges. Automotive dealers will have to continue working hard to overcome their customers’ concerns over committing to a new car and manufacturers will have to work hard to support them in the short term.

“But of course there is an opportunity to think beyond European shores and auto retailing in the UK is seen by many as a benchmark for best practice across the globe. We see growth in the Far East, China and India as the new economic powerhouses of the world and are helping dealers and manufacturers there improve their operations.”

Swindon-based accountancy firm Banks BHG have also given their reaction to the vote. Neil Elsden, director at Banks BHG chartered accountants in Swindon added:

“Obviously this is a big decision the country has just made and we will need to let the dust settle from all of the potential ramifications. The biggest concern in the immediate aftermath is the reaction from the markets but we would expect any falls to recover once everyone has taken time to reflect. There are unlikely to be changes made quickly and whilst this potential uncertainty could be considered unsettling the longer it lasts the more it will be considered the default state of affairs and the less unsettling it will be.

“In the medium term there may well be leadership challenges in both the Conservative and Labour Parties but a change in Prime Minister would not be expected to see any significant shift in Conservative Party policy as much of this is set by the 2015 Manifesto. There may also be calls in Scotland for another Independence vote once the demographics of the vote have been analysed.

“Longer term it will be up to those charged with negotiating the terms of Brexit that will determine how things go.”

As we awoke this morning, the uncertainty of Britain’s future outside the EU has caused the London Stock Market to dive more than 8% and the pound has hit its lowest value since 1985.

Corsham based financial services firm Hartsfield Financial Services director Paul Verwoert commented: “The Newcastle and Sunderland results last night had the same effect as the first exit poll from the last General Election. They gave cause to stop and think ‘hang on, the outcome isn’t going to be what most people expected’. Currency traders were quick to realise that their initial complacency had been misplaced as Sterling plummeted to levels not seen since 1985.

At time of writing, we’re waiting to hear from David Cameron and it will be crucial to hear from him how currency and financial markets will be stabilised.

For our clients, our investment portfolios are well diversified and are designed to ensure that in nearly all scenarios, there should be some part of the portfolio experiencing growth. While we now expect a period of uncertainty and therefore volatility, it is important to maintain a long-term stance with investments and rest assured that we will be keeping our managed portfolios under regular review.”