The poll was a close call with a split of 52/48 in favour of Britain exiting the EU – and soon after the result was called on the morning of June 24, financial markets were hit hard as businesses braced for a period of intense uncertainty.
Prime minister David Cameron announced his intention to stand down in October after “steadying the ship” in the wake of the ‘leave’ vote. He said it would be up to his successor to invoke Article 50 of the Lisbon Treaty and negotiate the UK exit from the EU.
Once Article 50 is invoked, there will follow two years of negotiation between the remaining 27 countries and the UK about the totality of relations between the EU and UK.
Mark Carney, governor of the Bank of England, spoke to allay fears: “We are well prepared for this. The Treasury and the Bank of England have engaged in extensive contingency planning. The Bank will not hesitate to take additional measure… supported by a resilient UK financial system, one that the Bank of England has consistently strengthened over the last seven years.”
He said the capital requirements of the country’s largest banks were 10 times higher than before the crisis, and assured that the Bank of England had stress-tested them “against scenarios more severe than the country currently faces”.
But Road Haulage Association (RHA) chief executive Richard Burnett reflected the unease among hauliers: “This is an ‘earthquake moment’ for the whole country, the economy and our industry. We simply cannot take anything for granted. It’s vital ministers and the Bank of England work quickly to steady markets and nerves.”
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), also called on government to act fast to maintain economic stability and secure a deal with the EU which safeguards UK automotive interests. “This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world and making the UK the most competitive place in Europe for automotive investment,” he said.
Steve Clarke, group marketing manager for Fuel Card Services, reckoned that in reality, Britain will remain within the EU for at least the next two years, and probably rather longer. “David Cameron is unwilling to trigger Lisbon’s Article 50 during his remaining months in office. Even if his successor acts immediately, the 27 other EU members are all opposed to our departure and each one has the power to delay the exit process for years,” he said.
“Although 94 per cent of UK firms do not trade with the EU, everyone’s projected whole-life vehicle costs will rise in the very short term. Sterling’s fall effectively raises UK prices for fuel which will be reflected at the pumps in the coming days and weeks. It also hits anything else sourced from overseas and there may have to be temporary duty and tax rises.
“In the mid- to long term, history shows markets always stabilise. The key difference between the current exchange rate crisis and any previous difficulty is that this one was anticipated.
“Although the referendum result is clear,” Clarke concluded, “there remains a great deal of uncertainty. We know only that change is inevitable, without having a timescale. Britain will look the same next week as it did yesterday, but it may be a very different place in a few years’ time.”