BREXIT: In or out? Whatever happens we’ve already lost
23/06/2016 / Comments 3
After months of “appalling campaign tactics” and “scaremongering” from both sides of the Brexit debate, the looming EU referendum decision is finally here.
But, arguably, whatever the end result, as businesses and as a country we’ve already lost before the votes have even been made.
Throughout the debate, both sides have bombarded the nation with statistics that show what they believe is the potential cost to the country of either leaving or remaining in the EU.
However, the truth behind these numbers has been highly debated with both sides of the debate accused of exaggerating figures and scaremongering to gain votes.
These conflicting reports have built up an overwhelming sense of uncertainty in the business world, and as a result no-one really knows what exactly will happen once a decision has been made.
So, with no clear understanding of what we can expect after the vote has been cast, what’s perhaps more interesting is to consider what the campaign itself has already cost us.
£142.4m – The estimated cost of the referendum
Holding a UK-wide referendum does not come cheap.
According to a written statement to Parliament by the Cabinet Office from March 2016, the estimated cost of conducting the EU referendum is a staggering £142.4 million – almost double the £75 million spent on the last UK-wide referendum.
This money, much of which comes from taxpayers’ pockets, will have gone towards things such as: expenses incurred by counting officers in running the poll, grants to the designated lead campaign organisations, the delivery by Royal Mail of campaign mailings from those organisations, and the cost of the central count.
But, arguably the true cost of the referendum itself is much higher.
Whilst we can’t categorically blame all recent economic dips or lack of substantial growth on the potential Brexit, there is an overwhelming feeling that the uncertainty created by it is a large contributing factor.
The cost of these economic changes has not been included in the estimated figure, suggesting that the referendum could be even more expensive than we first thought.
Dip in business investment
A host of business surveys and opinion polls have revealed that many businesses are delaying big spending projects until after the nation votes on whether to remain a member of the European Union.
And, as a result, the Institute of Chartered Accountants (ICAEW) has predicted growth in corporate spending will dip to 4.1% in the three months to the end of June, down from 5.2% in the first period of the year.
If correct this will be the third consecutive quarter of slowing investment.
In the first three months of the year UK business investment declined by 0.5% compared with the final quarter of 2015, and was 0.4% lower than a year earlier, according to the Office for National Statistics.
Weaker pound decreases purchasing power
Last week the pound tumbled 1.2% to below $1.41, its lowest for two months, although it has rebounded since. Whilst this weakening of the pound could be attributed to a number of economic factors many economists have blamed a recent surge in Brexit support.
But what does a weak pound actually cost us in the UK?
Well, for businesses that import goods a weaker pound inevitably means their costs go up as their purchasing power abroad falls. And, as a result, many businesses may be tempted to pass on this increase to their customers by hiking the price of their goods and services.
Also, those who regularly take a trip overseas, whether for business or pleasure, will find their trips more expensive.
Employment figures open to interpretation
But it’s not all bad news. Despite businesses claiming to have put employment decisions on hold until after the referendum, official statistics show unemployment dropped from 5.1% to 5% in
February to April 2016. This is the lowest rate since August to October 2005.
At a glance, this record-low unemployment rate looks extremely promising and suggests that all the doom and gloom we’re hearing about hiring is misleading.
However, it has been argued that the news from the Office for National Statistics was not all good.
Employment was up by 55,000, but all bar 5,000 of the increase was due to the hiring of part-time workers.
Also, the pace of job creation has slowed over the past year and there has been a stall in private sector hiring.
So, without the looming referendum result maybe the statistics would have shown an even brighter picture.
What do you think? Has the referendum already had an impact on your business? Or was it necessary to ensure the public can have their say on such an important issue? Please share your thoughts in the comments below.