KPMG experts from across key industry sectors give their intial thoughts on the impact of the EU referendum result.
Financial Services Partner at KPMG in the UK.
“The leave vote will send a shudder through the financial services industry. The sector now needs to step forward and tell the government exactly what it needs from negotiations with the EU.”
"We would expect UK companies’ appetite for new leases and liabilities to diminish, leading to a general dip in occupier demand – particularly in the City. That said, should sterling go into tailspin, investors playing the long game are more likely to jump on what could be a once-in-a-lifetime opportunity. Given the traditional strength of the UK property market, it’s likely to be seen as a relatively safe bet, despite currency turmoil.”
“The Brexit vote will see the UK economy navigating extremely turbulent waters over the coming months. In the short term, the thick fog of uncertainty will make it hard for businesses to plan beyond the immediate horizon. Businesses need to reassess priorities and adjust for fresh realities in terms of new tariffs and other trade restrictions, pressures on wages and labour availability, and a deterioration in public finances.”
The UK's 6,000 private sector DB schemes covering £1.6 trillion of pensions obligations will be in for a rough ride - hit with the prospect of higher inflation, and an expected fall off in pension asset values over the next couple of years. Four out of five schemes were already underfunded. UK businesses will be under pressure to divert cash to shore up historic pension liabilities.”
“There are vast numbers of EU nationals working in the hospitality sector. EU supplier and commercial contracts will need to be reviewed, and foreign visitor numbers will also be a concern for the industry. On an economic level, it’s fair to predict the result will probably impact consumer confidence, driving down discretionary spend in the short to medium term."
“It’s very likely people will put big decisions like house purchases on hold. We can expect things to stay deflated for some time – perhaps until next spring. There will be a tale of two economies when it comes to prices. Outside central London, we don't expect to see material price discounting. But in central London, the softening that has already occurred will continue."
“A downturn in the financial markets would put further pressure on hard-pressed local authority finances and pension deficits. Restrictions on labour movement could hit social care services and the workforce needed to deliver major programmes too."
“The things that make the UK tech sector so strong and attractive remain in place. I see it not only withstanding this result, but continuing to grow and thrive.”
“Industrial manufacturers have three obvious challenges: understanding what the supply chain looks like beyond their big suppliers; considering how to retain non-UK talent and develop more at home; and investment. Whether manufacturers choose to locate or develop their operations in the UK will probably depend on the shape of negotiations with Europe, but government action will be important to ensure we remain attractive.”
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