What a week it has beenPosted on: 05 July 2016 by Steve Wanless
Steve Wanless reflects on the EU referendum result and how it could impact on your financial future.
Up, down, sideways – not really getting much joined up thinking and a lot of reaction since the vote to leave the European Union (EU) by the United Kingdom (UK).
Markets and the pound have stabilised after a few days.
Political turmoil has been rife both in the government and the opposition Labour benches. Angela Eagle looks poised to challenge Jeremy Corbyn whilst Theresa May, Michael Gove and Steve Crabb start their campaigns for leadership. Boris Johnson has ruled himself out so he will not be laying bricks in a wall with Donald Trump anytime soon.
In Europe Nigel Farage and his post Brexit speech; accusing the members of the European Union of being idle: “Now, I know that virtually none of you have ever done a proper job in your lives or worked in business or worked in trade or indeed ever created a job. But listen, just listen."
We are not sure that telling Europe their experiment has failed or they are all ‘workshy fop’s is a good strategy for negotiating with Europe but Nigel won’t be the one negotiating!
The uncertainty and a certain amount of fall out were to be expected when things do not go the way you want. The majority of MP’s didn’t vote the same way as the electorate.
We do live in a globally connected world. Whilst the UK is an island the connection to Europe and the rest of the World is what matters to the economy and standard of living.
The negotiation to make that connection work for the UK’s benefit is crucial, irrespective of whether the UK is at the EU table as a member or not. The writer helped a start-up company for fifteen months recently and over that period 48 countries were exported to, all over the world.
Export accounted for over 50% of that company’s turnover.
We are connected and now the competency of the negotiators will come under scrutiny.
Fundamentally the mood is positive. It has to be. The outcome of a leave or remain vote cannot be controlled now but the UK can deal with the effects of the leave decision with some considered strategy in areas where decisions are best off made quickly or alternatively when the dust settles and a clearer vision of what the future holds can be assessed.
So let’s take a look at some areas where decisions are being delayed or made
Sajid Javid the business secretary gathered together 27 representatives of the top UK Business groups to discuss the fallout from Brexit. These included the CBI, FSB and Institute of Directors to name a few. Mr Javid promised that in negotiations, access to the single European Market would be his priority and on favourable terms (1).
This is great especially for car manufacturers who had a bumper year in 2015 with aid of a single market.
In the manufacturing sector companies have responded with a ‘what’s done is done’ consideration. The fallout is with the pound falling in value. It makes export more attractive to buyers but import of parts more expensive for manufacturers. Uncertainty still abounds on the future with trade deals, investment, Research and Development still to be negotiated and considered (2).
The newly elected Mayor of London, Sadiq Khan, has asked for London to have some devolved powers to raise money post Brexit at the Time CEO summit. So, tax raising via property in the capital (stamp duty and business rates) and more control over business and skills (3).
George Osborne has confirmed that tax rises and spending cuts will be required to deal with the impact of the leave vote but the next Prime Minister (not George though, he has ruled himself out) will decide these. He told everyone his pre Brexit warnings were coming true (4). Nice to know “I told you so” is still alive and well at Westminster.
Rumours abound that City bankers are making plans to move operations abroad but are waiting until the UK has negotiated its deal and relationship with the EU. Research confirms that a loss of 10,000 bankers will cost the UK government £1 billion in lost taxes (5).
Entrepreneurs have been called upon to step up, look forwards and that the UK "will never stop being a competitive, entrepreneurial and a dynamic place to innovate and create jobs" (6).
As we mentioned above there is uncertainty but the mood is positive.
Trust in your plan
As Independent Financial Advisers (IFA’s) it is our job to reassure customers in the aftermath of such shock and turmoil. The key message an IFA should be giving you is trust in your financial plan. Advice is key and if you are advised, have made informed decisions, are investing for the long term and have a diversified portfolio the short term market volatility whilst concerning, should not worry you.
We have had very few calls from customers and quite rightly so as they have worked hard, educated themselves and trust in their financial strategy for the long term objectives.
- BBC News Online – Business secretary says EU trade ties are top priority – Accessed 30th June 2016
- The Telegraph Online – Made in Brexited Britain – how the referendum will impact manufacturing – Accessed 30th June 2016
- BBC News Online – Mayor Sadiq Khan calls for London spending powers – Accessed 30th June 2016
- The Times Online – Osborne: tax rises and spending cuts on the cards – Accessed 30th June 2016
- The Telegraph Online – Here’s how much it will cost the UK if bankers start quitting the city following Brexit – Accessed 30th June 2016
- The Standard Online – Rise above Brexit shock and stay dynamic, tech leaders urge – Accessed 30th June 2016
For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail email@example.com or take a look at our website www.wwfp.net.
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