Ahead of the today’s European Union summit in Brussels, where European leaders of state negotiate a new “deal” for Britain in the EU, European Commission President Jean-Claude Juncker warned that a British exit from the European Union was not an option and that there was “no plan B”.
Despite this optimistic rhetoric, I’d like to suggest that corporate leaders in both Europe and the US need to have that plan B to ensure their business and communications goals are not thrown off should Britain vote to exit the EU. A potential referendum on “Brexit” is expected after the negotiations are completed, possibly as early as June.
With this in mind, Sir Stephen Wall, our Chief Adviser on Europe and a 35-year veteran of the UK Foreign Office, went to New York last week to discuss the likelihood of Brexit and what it would mean for businesses with transatlantic interests. He spoke with a select group of senior business leaders about the history that has led to the referendum and what Brexit could mean for businesses operating in the US, UK, and EU.
As Sir Stephen explained, a year ago, the prospect of Brexit seemed remote. Now, largely due to the worsening migrant and economic crises, the spectre of Brexit is once again on the horizon. Although many commentators believe a British withdrawal from the EU is still unlikely, the increased strain of anti-Europe sentiment in Britain means the referendum could tip either way.
Sir Stephen emphasised that both American and European businesses have benefited from Britain’s membership in the EU, and are increasingly expressing their concerns about the potential ramifications of the referendum. Recently, for example, global pharmaceutical executives warned that Brexit would isolate the UK’s scientists and reduce its influence in medicine. The City of London too has expressed wariness over the effects of a potential EU exit on the financial services industry.
Bloomberg reported that Brexit would deliver three blows to the $2.6 trillion economy through confidence, credit, and currency shocks. And yet, while voices from across politics and the media are calling for Britain to stay in the EU, recent polls indicate that Britons are starting to warm to the idea of an “out” vote.
Attendees at last week’s dinner agreed that businesses with a stake in the UK or Europe must prepare for the potential effects of the referendum – whether this involves preparing contingency plans, crisis communications strategies, or other tools. American businesses in particular will have to re-evaluate the country’s “special relationship” with the UK in light of the ramifications of losing Britain as their natural gateway to the European market. Companies with stakes in the UK will have to prepare for potential new barriers to trade with the rest of the continent. Above all, business leaders will have to monitor the debate, the innate risks posed by the referendum – and the potential hazards of supporting one side, which may be the losing one.