One year on from the 52% majority that ensured Britain would leave the European Union and Brexit is continuing to fuel uncertainty across financial and business markets. Overall this uncertainty has boiled down to three central concerns, financial services, staffing and investment.
The impact of Brexit on the UK’s banking industry remains precarious. According to Reuters, banks situated in the UK have significant contingency plans to shift operations to mainland Europe. Research by Reuters suggests that as many as 9,000 financial jobs may be moved to the continent during the negotiations. Currently Deutsche Bank has the largest plans, with an estimated 4,000 jobs set to be moved to Germany’s own financial zone in Frankfurt. The Institute for Fiscal Studies has warned that if high-earners leave, Public Sector funding will become even harder. Indeed, the impact of a few thousand very well paid financial jobs leaving the UK is likely to have a far more damaging effect on the economy, compared to industries such as Nestle pulling out less well paid manual work post-Brexit.
Staffing is another huge concern for businesses across the UK. According to Business Insider, Brexit is to blame for a staggering 50 per cent drop in technology workers coming to the UK. But it’s not just high end jobs at risk in the post-Brexit UK economy, seasonal workers in farms across the county are beginning to shun coming to the UK. In May, farms recorded a 17 per cent shortfall. The public sector is also affected, according to the BBC the NHS has recorded a 96 per cent fall in EU nurse applications. This puts the UK government in a difficult position, with cultural problems affecting UK worker’s willingness to work part time in farms, and financial pressures to replace EU nurses with UK students at a time when maintenance allowances for UK student nurses have been scrapped.
Ian Stuart, European Head of Commercial Banking at HSBC has warned that companies can simply, “not afford to freeze their business plans and wait for uncertainty to lift”. This is in response to the growing feeling of uncertainty among businesses in the UK compounded by a chaotic election result on June 8th. This is beginning to be felt in investment, which fell by 0.9 per cent in the final quarter of last year. With future economic growth heavily reliant upon strong investment, this news is likely to deepen uncertainty on the strength of the UK economy post-Brexit.
These three central concerns persist to be the cause of a major headache for UK businesses and that’s not to mention inflation. If the government is unable to ensure certainty in these areas, then the impact on the wider economy as a whole is likely to continue to get worse. If this is the case, we can expect to see a softened stance to the Brexit negotiations with an inevitable howl of betrayal by staunch leavers, but hey, that’s just business.