Navigating uncertainty and preparing for change.
While the UK’s vote to leave the European Union is already sending shockwaves around the world, the long-term implications are yet to be seen. How will the Brexit affect the markets and your company? How will the regulatory and risk environment change for organizations doing business in or with the UK? Read Mercer’s latest insights on how you should be preparing your business, and your workforce.
Brexit creates significant political, economic, legislative and market uncertainty unlikely to clear in the near term. It will be important to monitor events closely and to consider the impact of the referendum on your organisation.
The UK referendum creates the potential for market volatility across global equity markets, particularly in the UK and Europe, as participants weigh up the likely implications of Brexit.
This will bring significant uncertainty in terms of the economic impact on the UK and European economies in particular, but also globally. The source of uncertainty is likely to persist for some time, while the nature of the UK’s trading relationship with the EU and elsewhere is negotiated and employers decide whether they need to alter their business objectives.
This will change the risk environment over the short to medium term, including investments and pension risk. Companies either based in, or with operations in, the UK should review the following areas:
Under the more likely scenarios, global non-EU multinational companies and EU-headquartered firms with sizeable UK operations will need to rethink and possibly restructure their UK operations, given the likely additional cost and complexity associated with accessing EU markets. UK-headquartered firms with global operations, domestic firms, and government bodies will all face tactical challenges, but will be less affected in the medium term. Some industries will be affected more than others, with the most significant impacts anticipated in financial services.
Workforce plans will need to be revisited as the picture unfurls. However, given the significance of long-term planning in talent management, companies would be wise to not delay.
Negotiations will now determine the circumstances under which EU citizens will be able to work in the UK, and UK citizens already in the EU will be able to continue in their current roles.
These negotiations may take years to complete, but will create significant uncertainty while they take place. Many people are, at the least, disconcerted or worried by the future unknown implications both personally and in relation to their roles – the leadership election for the UK’s Conservative party and likely general election will only add to this. In the short term companies will need to communicate and reassure their employees – particularly those who may be directly affected.Finally, this challenge will demand a lot from leaders. Leaders themselves need to be enabled and supported to ensure their organisations are successful in these choppy and uncharted waters.
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