In one way, nothing has changed in the UK since the referendum vote and in another, everything has. The UK remains a member of the EU and whilst a narrow majority of the nation voted to leave the EU nothing will change until the British parliament approves the enactment of Article 50 which triggers a two year process by which the UK and the EU disentangle themselves. Such was the pessimism on the Leave side that next to nobody believed the vote would go their way until it did. Few seem to have realised that there will be no formal discussion on post exit trade relations until the transition is completed. If it plays out this way, the markets and the UK economy will suffer two deep shocks: 1) when Article 50 is enacted; 2) when the UK leaves the EU and has no trading relationship as the new relationship (or lack of it) is forged. These shocks will be bad for the European and global economies, but far worse for the Pound and British economy. The only way to ensure that the UK will enjoy continues access to the single economy would seem to be not to leave the EU at all which is entirely possible, but politically, highly unlikely in the present climate.
Business abhors a vacuum. Business confidence has nose-dived since the decision of the electorate to leave the EU, with businesses reporting feeling pessimistic about the UK economy nearly doubling from 25% prior to the vote to 49% currently, according to research conducted by the Centre for Economics and Business Research. This means that such companies will be much more cautious on business expansion plans and on recruiting new staff. It is this type of indicator rather than stock market value which charts the real effect of the referendum decision.
The research indicates that business expectation over sales within the UK, exports and investment plans have all been negatively affected in these firms, but equally that half of those interviewed remain optimistic right now. Consumer confidence has declined to a level last seen in May 2013.
If the UK does indeed sever its ties with the EU, this will be the calm before the storm.