The UK is gripped by a phoney war over the decision to leave the EU. Those who wished to remain in the EU cited economic experts that (almost to a man) pointed out that the UK would suffer if it left the EU. They differed on the depth and duration of such a decline, of course and the Remain team were guilty of over-playing the economic consequences to the UK in the post vote environment. The Leave side countered that any such economic projection was “Project Fear” and the babblings of despised experts of which the country had had more than enough. The Remain team made the huge mistake of implying that the economic harm would be immediate and profound. The decision to leave the UK may have been taken on the 23rd June 2016 (or not, as the case may be…), but the formal process of commencing with all that that entails does not start until Article 50 of the Treaty of Lisbon is formally invoked. Consequently, although the mood music is now utterly different, in reality, nothing has yet changed and the UK is (until further notice) a full member of the EU and enjoys all the advantages that it offers. Consequently, economic indicators have yet to clearly point towards the red; a fact that is lulling many Brexit voters into a sense of false security.
The Federation of Small Businesses (FSB) has just published its first post-Brexit survey of confidence. The survey shows the second largest loss of confidence in the index’s history and now a majority of small and medium-sized enterprises are pessimistic about the future for the first time since 2012. It was the third quarterly reading to show declining business confidence and involved 1035 businesses.
A major uncertainty afflicting UK business is the impending new relationship with the EU and whether the UK can manage to retain access to the single market (and, critically, passporting) whilst delivering on promises to restrict EU citizens’ rights to live and work in the UK. There is no agreement (publically, at least) between the Leave proponents and the “type” of Brexit they favour. UK politicians talk with confidence about deals being struck with the EU to the mutual benefit of both, but they overlook the domestic political agendas in 27 sovereign EU states. Interesting times indeed.