Brexit – nobody panic (yet)

By Edward Haigh.

In the immediate aftermath of the Brexit vote passions were running as high in our offices as I presume they were in many others. Fiona and I, sensing that brave and decisive leadership was required, and showing what we considered to be an admirable degree of self-sacrifice in the face of cruel adversity, wasted no time in convening an emergency breakfast for two at Fortnum & Mason’s elegantly re-fitted restaurant, 45 Jermyn St, to hatch a plan.

A brave plate of eggs benedict and several decisive cups of silver-needle jasmine tea later, the only plan we’d come up with was Fiona’s one to single-handedly fix everything by tea time the following Tuesday using nothing more or less than her fervour, intellectual self-confidence, and what you might call an artistic interpretation of the notion of democracy*. That being impractical, we resolved to do some research.

Mindful that our opinion would carry more weight with management consultants than the disaffected labour voters of Sunderland, we restricted the scope of our research to the impact of Brexit on the consulting industry, and decided to speak to both consultants and their clients. In other words, we did precisely as we usually do.

The results – shown on the infographic below – were interesting on any number of counts, the biggest of which was the overwhelming sense that everybody else had reacted far more calmly than us. Not only had they not convened an emergency breakfast at Fortnum’s (such coolness!) they simply didn’t seem terribly worried at all. Sure, somewhere around a third of clients and slightly fewer consultants had delayed recruitment decisions, and a small number of each had delayed investment decisions or cancelled existing projects, but that left the vast majority not appearing to have done much at all. Given that the entire British political establishment appeared to be crumbling in front of their eyes, and that the Pound was fast approaching parity with the chip as useful tender, that seemed remarkably level-headed.

Why? Two reasons stood out: one was the timing of our survey. It was conducted between the 5^th and 14^th July, which meant that many people simply hadn’t had time to digest everything that had happened, let alone react. With that in mind, we’ll be conducting another survey before the year’s out.

The other was arguably the more telling: when it came to the question of Britain’s access to the single market post-Brexit, just 25% of clients and 19% of consultants thought it would be lost. Moreover, were access to remain in place, both sides agreed that the negative impact on their business – moderate in the short term – would quickly diminish, and that five years from now things would be pretty much back to normal. In other words, they thought neither that Brexit had happened yet, nor that it ever really would.

There is, though, a flip side to this story, and it’s about what happens if the minority are right, and access to the single market is lost. For consultants, the short term negative impact of that is likely to be offset by the 77% of clients who say their consulting spend – either on dealing with Brexit directly, or on risk- and cost-reduction – will be unaffected or even increase. But clients fears for their own businesses look far greater and in the long run it’s hard to see how anybody’s interests are served by that.

I’m left with the sense that what the referendum did was actually nothing more than to set a time-bomb ticking, and that everything now concerns what happens when, where, and even if, it explodes. Clearly most people either don’t think it will, or they’ve decided to enjoy their summer holiday first and panic about it later. I’m booking breakfast, just in case.

*This plan still exists but the timescales for delivery have been pushed back a bit.
 

To download a full copy of the report, please click here.