We find ourselves in week one of a completely new landscape. The ramifications of the UK’s decision to leave the European Union will be felt far beyond the initial market volatility.
So far the vote has called into question the regulatory framework for financial services, potentially stalled the housing market and thrown our domestic politics into disarray (and apparently affected England’s ability to play international football).
No-one was prepared for a majority Leave vote. I have heard of publications (not Money Marketing I hasten to add) who painstakingly edited a version of a story which had the UK coming out as Remain while barely glancing at their Leave story. Frantic news editing ensued.
I have also heard of providers going into communications “lockdown” over Brexit, and analysts have told me they are not saying anything in relation to what a Leave vote means for fear of looking stupid in a few weeks’ time.
Bank of England governor Mark Carney has also sought to reassure jittery markets with talk of contingency plans and the fact £250bn is ready to be deployed to help with market liquidity. Given Carney took to the lectern within an hour or so of David Cameron announcing his resignation, this perhaps shows the new world order in a post-EU environment.
Financial services firms are also scrambling to digest what the vote means for them. What regulatory framework will they be subject to in future? What will this mean for future business strategy? Will the Leave vote cause important business decisions to be shelved, or will these decisions to avoid getting caught out on the wrong side of EU negotiations?
One week in, and “it is too early to tell” is becoming a weary and all too common refrain. The more truthful answer, though used markedly less often, is a simple “I don’t know.”
Advisers have obviously been doing a good in preparing their clients for any fallout from the referendum. Anecdotally, the panic on trading floors being shown on the evening news is a far cry from the reality for advised clients.
Advisers will need to hold the line on encouraging clients to stay invested for as long as they believe that to be the case. Given the political turmoil we are seeing at the moment, god knows clients will need a calming presence in their lives.