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March 11, 2019
Business groups have called on the Government to take action to help stabilise the UK economy in the wake of Britain’s historic decision to leave the European Union.
The business community had been divided in the run up to the referendum, with many prominent figures expressing starkly contrasting views on Britain’s future membership of the EU.
But with the outcome now clear, business leaders are seeking reassurance as Britain enters a period of potential economic and political uncertainty.
Carolyn Fairbairn, Director General of the Confederation of British Industry (CBI), commented on the consequences of the vote to leave, saying: ‘Many businesses will be concerned and need time to assess the implications. But they are used to dealing with challenge and change and we should be confident they will adapt.
‘The urgent priority now is to reassure the markets. We need strong and calm leadership from the Government, working with the Bank of England (BoE), to shore up confidence and stability in the economy.’
This view was echoed by the British Chambers of Commerce (BCC), which called for ‘swift’ and ‘decisive’ action from the Government to help stabilise the markets.
‘Some businesspeople will be pleased with the result, and others resigned to it. Yet all companies will expect swift, decisive and coordinated action from the Government and the BoE to stabilise markets if trading conditions or the availability of capital change dramatically,’ said the BCC’s Acting Director General, Dr Adam Marshall.
The Federation of Small Businesses (FSB) has also stressed the need for clarity on issues such as exporting and the single market.
‘Clearly the EU referendum debate has been contentious, but we now call on the Government and all parties to bring stability for the business community,’ commented the National Chairman of the FSB, Mike Cherry.
‘The FSB calls on the Government for clarity on what these decisions now mean for business, including how businesses will have access to the single market and the free movement of people and trade,’ said Mr Cherry, adding that these are ‘crucial questions that need to be answered swiftly’ in order to protect the falling confidence of the UK’s 5.4 million small businesses.
Meanwhile, Frances O’ Grady, General Secretary of the Trades Union Congress (TUC) outlined the need to ensure that UK jobs are safeguarded, stating: ‘As the UK prepares to leave the EU, the first priority now is to protect jobs and defend the living standards of working people. The Government must urgently set out a plan to defend UK industry and keep British jobs. That means defending the pound and stimulating the economy.’
Following the result, the pound dropped to a 30-year low, while the London stock market fell by 8% before later regaining some momentum. This, along with David Cameron’s decision to step down as Prime Minister, has left many businesses and economists wondering what the future has in store in the aftermath of so-called ‘Brexit’.
In a statement, the BoE said it was ‘monitoring developments closely’ and would ‘not hesitate to take any additional measures required’ to support monetary stability.
The Governor of the BoE, Mark Carney, sought to reassure the markets by confirming that the central bank had made extensive contingency plans in preparation of a Leave vote. He declared that there will be no initial alteration in the way in which people are able to travel within the EU, or in the way that goods are moved and services are sold.
He also revealed that an extra £250 billion is to be made available through the bank’s normal facilities to help support the functioning of markets, adding that the BoE is able to provide substantial liquidity in foreign currency, if required.
In a move also intended to bring stability to the markets, Chancellor George Osborne argued that the UK was ‘ready to confront what the future holds for us from a position of strength’, although he warned that ‘it will not be plain sailing in the days ahead’.
In his first speech following the referendum result, Mr Osborne also indicated that there will be no immediate emergency Budget. He said it was ‘perfectly sensible to wait for a new Prime Minister’ and the Office for Budget Responsibility’s (OBR) autumn forecasts before taking any action.
The decision to leave the EU will undoubtedly affect many businesses and individuals. Whatever lies in store, we will be on hand to advise you and your business, so please contact us for advice.