Brexit: what now?
The campaign is over: Britain has voted to leave the European Union. For a decision of such moment, the result is agonisingly tight.
The initial consequences are clear. The Prime Minister has resigned, unable in conscience to lead a country that was not following him. Scotland voted overwhelmingly to remain in the EU, and Nicola Sturgeon has made clear that that’s where she sees its future, making a second independence referendum likely. The pound has dropped to a more than 30-year low against other major currencies; the FTSE 100 opened with an 8% fall, with the major British-based banks losing a third of their share values.
The longer-term consequences will play out over the coming months and years. It has been very clear in recent weeks that the property and development sector as a whole was strongly in favour of remaining in the European Union. Development loathes uncertainty, of which we will now see plenty. We will have to see whether, as feared, that affects the number of new projects brought forward, and the number of spades in the ground.
The collapse of the Northern Powerhouse?
What consequences for the idea of the Northern Powerhouse? Politically, the result may prove to be a fatal blow for its author, the Chancellor, the driving force behind devolution deals. He will hope that the groundwork that has been laid in the form of outreach and trade missions to China and the wider world offsets any decline in foreign direct investment from the EU. The UK is currently the leader in FDI from other European nations; it may not look so attractive now.
The fear will be that investors globally that saw the UK as a dynamic, attractive gateway for investment in the EU now look to Germany or France to fulfil the same role. Investment was to be the lifeblood of the Northern Powerhouse. Without inward investment, and without George Osborne in Number 11, there will be fears that the vision could crumble.
We’re set for a prolonged period of financial and political uncertainty that is, in many ways, unprecedented. We will be sure to analyse and report on the changes to come.
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