The EU Referendum – businesses want stability

worried businessmanWith just 23 days to go before the UK votes on whether to stay in or leave the EU there is a big question mark over the stability of the UK economy both in the run-up and after the votes are cast.

Certainly stability has been noticeably absent for businesses as the deadline approaches.  Investment and other business decisions have been deferred, UK growth appears to have stalled, particularly in construction, and manufacturing has entered recession.

All this has, of course, to be set in the context of sluggish growth both in the EU and China since the start of 2016, not to mention a volatile commodities market and political instability in many parts of the world.

The arguments from both the Brexit and Remain camps have been more in the nature of predictions than absolute fact, and neither side has put forward any concrete plans for what they will do after June 23.

It should be remembered that the UK at the moment is ranked number 1 as a soft power due to its cultural influence and is “hyperconnected” to the rest of the world given its demographics, where one in eight of its 64 million population was born overseas.

What of the future?

Undoubtedly there will be serious repercussions for the UK economy and for business if the vote is to leave, not least because a vote for Brexit will not resolve the certainty about the outcome whereas a vote for Remain will at least clarify the situation for business.

But it would be a mistake to assume all order will be restored, calm will return and the economy will stabilise even if the outcome is to remain in the EU, especially as it would seem that it will not resolve issue of a Government majority due to the anticipated fall out in the Tory party.

Furthermore, the decision to hold a referendum has itself altered relationships and the balance of power between politicians and arguably altered perceptions of the country with its trading partners and others across the world.

If there is a narrow majority for either leave or remain it is unlikely that the “losers” will accept defeat gracefully.

It is possible that now that the debate has been opened up there will be a push for renegotiation of some of the issues that the UK and other countries object to within the EU regardless of the outcome although it is believed that a vote to remain will weaken the UK’s hand in any future negotiations since we will have already played our only ‘nuclear’ card.

While the issues are played out, the Government is going to find it hard to focus on what needs to be done to restore the economy.

So it will be a while before businesses can expect a return to a level of stability that will give them the confidence to unlock investment and pursue the plans for growth that have been put on hold.

(Image courtesy of Vlado at FreeDigitalPhotos.net)

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