Scarecrows depicting David Cameron, left, the former prime minister of Britain, and Boris Johnson, the foreign secretary, are displayed during the Scarecrow Festival in Britain on July 31. Credit Darren Staples/Reuters
In the run-up to Britain’s vote to leave the European Union, the two sides of the referendum debate had diametrically opposing views of the economics. Was voting for “Brexit” casting a ballot in favor of recession, or a vote for financial freedom?
More than a month on, little is clear. Britain’s trading relationship with the European Union will probably be in limbo for years. Companies are reassessing their long-term investments in Britain. And no one is sure what will happen to the Europeans working in the country.
Here is how the “Brexit” vote has shaped business so far:
Financial Ripples
$6,858.95
The last price of the FTSE as of Friday.
The FTSE has gone up about8 percent since its close price just before the referendum vote on June 24.
The impacts of the “Brexit” vote have been felt most sharply in the markets.
The pound has plummeted, and is now more than 10 percent lower against the dollar compared with a year ago. Mutual funds dependent on the country’s property sector have felt the strain — real estate funds run by Aviva Investors, Standard Life and M&G Investments, among others, shut their doors as panicked customers sought to withdraw their cash en masse.
Stocks, however, have been more resilient. After falling sharply in the wake of the referendum, Britain’s benchmark share index is now comfortably above its close on June 23, the day of the vote.
The New Art of the Deal
$1.31
The price of the pound in dollars, rounded as of Saturday.
The British pound has dropped11 percent since it was valued at $1.47 just before the vote to leave the European Union.
The steep fall in the pound has changed merger calculations for companies around the world.
In some cases, it has created bargains:
SoftBank, the Japanese internet conglomerate, agreed to buy ARM, a British designer of semiconductors.*
Qatar Airways has increased its stake in the parent company of British Airways, citing “an attractive opportunity.”
But the falling currency, combined with the increased uncertainty, also cast some deals into doubt — at least briefly. Anheuser-Busch InBev had to sweeten its giant offer for a rival brewer, SABMiller, which was finally accepted. Elsewhere, Deutsche Börse management had to lower the threshold for shareholder approval to greenlight its merger with the London Stock Exchange.
* While the pound has been about 30 percent weaker against the yen compared with a year ago, Softbank’s chief said the cheaper currency was not the driving force; the initial approach was made after the “Brexit” result.
Photo
Shoppers in London on Aug. 13. Credit Niklas Halle'N/Agence France-Presse — Getty Images
Economic Uncertainty
The British economy appears to be feeling the pressure since the June vote.
And amid all the uncertainty, some businesses are putting off major decisions, at least until they can get more clarity. Two-thirds of companies surveyed by Credit Suisse after the referendum said they were going to either postpone or reduce their spending in Britain in the next six months. Virgin Money, a British lender, said in July that it would delay offering banking products for small businesses.
