Businesses will need to ‘hit the button’ on short-term contingency plans says EY’s UK Chairman
Steve Varley, EY’s UK Chairman, discusses the implications of the EU referendum
We are now entering unchartered territory after the majority of UK voters chose to leave the European Union (EU) yesterday. It’s the first time a member state has left the union, and this means that the consequences are almost impossible to predict.
With the vote now cast, businesses will need to hit the button on the short-term contingency plans that many have been working on in recent months, while also starting to plan for the longer term. Communicating with staff about any potential employment issues that might arise, including the working and travel rights of European and UK employees, will be a high priority for many. Will these rights still exist in the post-Brexit world? This is likely to be a hotly debated issue.
Leaving the EU could also have repercussions for Government policy in the coming months. For example, will the Government support certain sectors through subsidies or tax relief? With changes to tax policy possible, companies need to consider their current tax profile and how any new tax policies could affect their holding and financial structures.
Above all else, it is vital that the message that the UK is open for business should not change. EY’s latest research on foreign direct investment (FDI) reveals that the UK continued to be the most attractive location for FDI in Europe last year. In fact, 2015 was a record year for the UK, with 20% growth in the number of projects. Businesses will need to work alongside the Government to ensure that this remains the case and to give the UK every opportunity to prosper in the future.
The UK will also have the opportunity to make new trade deals so it is important that key trading partners are quickly identified and negotiations accelerated. Businesses need to consider where the potential lies for their products and services and act accordingly.
One thing is certain: Brexit will result in a number of large-scale changes for UK plc – in areas such as trade, employment, regulation and Government policy. Few changes are likely to happen overnight. As a result, businesses now have a prime opportunity to take proactive steps to prepare for the challenges and opportunities that lie ahead.