Shocked chief executives from Mumbai to Denver woke up yesterday to face tough decisions over how to respond to Britain’s vote to leave the EU.
In Britain itself, businesses as diverse as engineering group Rolls-Royce Holdings PLC, drugs giant AstraZeneca PLC, housebuilders and makers of Scotch whisky were braced for disruption in the short and long term as the British pound plunged to its lowest level since 1985.
Big business — with a very few exceptions — has been strongly in favor of remaining in the world’s biggest trading bloc, primarily because of ease of access to 500 million European consumers.
Photo: Reuters
“The weeks and months ahead are going to be a nervy time for business leaders,” said Simon Walker, director-general of British business lobby the Institute of Directors.
Jaguar Land Rover Automotive PLC, Britain’s biggest carmaker, has estimated its annual profit could shrink by £1 billion (US$1.4 billion) by 2020 if Britain returns to WTO rules for trade with Europe.
Makers of Scotch whisky, which export about 90 percent of what they produce, have stressed the importance of the EU, which swallows about one-third of those exports.
The president of Japan’s Nippon Steel & Sumitomo Metal Corp, the world’s second-largest steelmaker, said the vote was extremely disappointing.
“We are greatly concerned for the negative impact this will have, not only on Britain and the EU, but also on the global economy,” Kosei Shindo said.
Big swings in sterling would be a problem for some international companies, with a fall in the currency hitting profits earned in Britain.
International companies with sizeable sterling exposure include Denver-based Molson Coors Brewing Co, owner of Carling beer, which is heavily reliant on the UK.
Aside from market access, streamlining of regulations within the EU has made life simpler.
Pharmaceutical companies, for example, enjoy a one-stop shop in the form of the European Medicines Agency — based in London — which approves new drugs for all EU countries, while the EU’s open airspace deals have fostered a surge in air travel and common policies on agriculture and food safety have allowed for smoother supply chains and richer eating.
Companies in those sectors have fretted that Britain outside the bloc would disrupt the regulatory landscape.
“This creates challenges for future investment, research and jobs in our industry in the UK,” Association of the British Pharmaceutical Industry CEO Mike Thompson said.
AstraZeneca said it was concerned for the competitiveness of the British life sciences industry and would work to ensure patient access to medicines, amid worries that leaving the EU could delay drug approvals.
For banks, a huge concern has been the threat that financial institutions based in London could lose their EU “passports,” or the automatic right to sell services across the bloc under single low-cost system.
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