Brexit becomes reality
June 24th 2016 – an historic day for the United Kingdom as the voting population opted to leave the European Union in favour of national independence. Unsurprisingly, today everyone wants to know what leaving the EU really means and how it will affect them. Well, it seems no one could get hold of a crystal ball to see what’s around the corner so in the immediate term, we simply don’t know what’s to come or when it will come. It is certain that anything that is going to happen will be slow. Our pre-voting day blog considered issues that contractors will be most interested in and for now we can offer no more direction on how this monumental outcome will specifically impact contractors.
The process of leaving will be no mean feat. With the UK now facing many years of negotiations, we have to employ a ‘wait and see’ policy while talks are held, old deals are undone and new ones struck. This uncertainty could benefit contractors as companies wishing to employ a cautious approach to boosting their business may favour hiring temporary resources with specialist skills that can be brought in and out more easily than permanent employees. Donald Tusk, EU Council President, has been quick to reassure the UK that during its two year withdrawal period from the EU we won’t lose our rights and must still honour our responsibilities.
This morning Bank of England Governor Mark Carney warned us all to expect “some market and economic volatility”. Indeed the exit announcement triggered the biggest one-day fall in the Pound (10%) since 1985 and the Sterling has been bouncing up and down in the past 24 hours and is likely to yo yo more over the next few days. This was always going to be the case with such a fundamental shift in world economics. And the Prime Minister’s resignation was always going to be next on the cards if Brexit became a reality. But Carney has also unveiled the bank’s ‘Plan B’ which involves £250bn to see the economy through this inevitable period of uncertainty. He attempted to reassure the public and media that Britain’s banks are robust and have been subject to rigorous stress tests to deal with huge volatility. It seems par for the course that we’ll need to see another recession through. We have recently come out of one and are familiar with employing austerity measures to build a stronger economy.
Whether you wanted in or out, it’s important that we respect each other’s views and now work together to build a stronger Britain. Yesterday’s vote saw the highest turnout since the 1992 General Election: 72% of those eligible to vote turned out to the polls, with 52% opting for Brexit. So in the immediate term these people at least will be supporting our outgoing and new Prime Ministers to build a more independent nation. Of course, Cameron’s successor will hope that as things become clearer there will be a better feeling about the UK’s life outside of the EU. Given that 48% wanted to remain, their voice will still be heard and negotiations are unlikely to be radical. They will be done by serious people looking for sensible outcomes.
European Commission President Jean-Claude Juncker suggested earlier this month that a deserter would not be welcomed with open arms. The UK still holds a strong position and has a significant contribution to make on the world’s stage so the reality is unlikely to be as devastating as first feared. Norway and Switzerland have strong trade agreements in place, despite not being an EU member so there’s no reason why Britain can’t achieve the same. Other economic powers will want stability as much as our own Government so it seems a reasonable bet that they will want to sit round the table and work out ways to keep stability as much as possible…and they’ll want to do it soon. After all, this is a worrying time for those countries remaining in the EU as a key player has left the game. Although he feels he’s “not the right captain to steer the country to its destination” Cameron has vowed to stay on and help steady the ship until his replacement takes over in October.
A quick glance at how votes were divided across the nation raises the question of just how united the UK will remain. Scotland and Northern Ireland voted to remain and Nicola Sturgeon has already suggested a new Scottish Referendum is highly likely. But there’s also the strong likelihood of other EU countries now reassessing their membership, so perhaps we should be asking ‘who’s next?’ France? Italy? The Netherlands? That opens up a wider debate about what might happen if the EU as we know it (at least up until 4:00am this morning) breaks up altogether. That’s a discussion for another day…
For now, no one knows how long this rollercoaster will last and how many twists and turns it will have. The UK’s contractors need to continue to deliver business as usual and apply their valuable skills to bolster our economy. This is a once in a lifetime opportunity for us all to take control and help shape the future.
As Britain’s Contractor Champion Intouch will be there voicing the concerns and ideas of the UK’s independent workforce. We will continue to advise our customers on the best way to run their Limited Company based on their individual circumstances and will be keeping a keen eye on developments to ensure you receive the contractor-centric interpretation. Make sure you’re with us for now and the future.
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.