It is now D day +32 and the country has experienced an unprecedented period of political change, along with significant uncertainty about Britain’s future relationship with the EU and the rest of the world.
On the positive side, few countries could achieve such a change of government so smoothly. But now that the initial emotions from the European referendum vote have died down, we need to work together to make the best of the new situation.
The markets have recovered somewhat, but the reduced value of sterling, the fall in the share prices of property companies and banks, declines in business and consumer confidence, and reduced forecasts of economic growth tell a story: that the Brexit decision will have a negative effect on the economy in the short term. The extent of the impact remains to be seen.
No businesses have announced that they are packing up and leaving, and it is hard to find examples of investment and expansion decisions being delayed – but this is not surprising. Businesses seldom make such decisions without detailed – and lengthy – analysis, nor is there ever a single determining factor. But there is no room for complacency. Some economic damage is being done and will continue to be done until there is at least clarity on the country’s direction of travel, and what is ahead of us.
There are two critical trade-offs which will need to be decided. First, there is much to be said for delaying triggering Article 50 until such a time that government has clearly decided its preferred outcome, and this cannot be done until all the options are carefully evaluated. It is also the case that triggering Article 50 will significantly reduce the government’s negotiating power, as it is one thing the European Union cannot control. On the other hand, the longer uncertainty continues, the more economic damage will be done.
The second trade-off is between the desire to maintain as far as possible the current level of access to the Single Market and the current price tag for that: free movement of people and a contribution to the EU budget, together with having no say on rules governing the Single Market in the future. This price will likely be too high for those who campaigned to “take back control”.
For many London businesses, there is a desire to continue to employ talent from throughout the EU regardless of the question of access to the Single Market, therefore it is no surprise that the concept of a “London visa” is gaining currency. This is something that should be seriously examined.
There needs to be a thorough debate on these issues, with businesses carefully assessing the impact of the alternatives and feeding those assessments into the policy-making process. As that is done, the preferred outcomes may become more apparent, and we at the City of London Corporation are working closely with industry and government to ensure the decisions that are taken are as well informed as possible, and that we are working to create new opportunities in markets around the world.