It’s the start of a new working week yet the fallout from the United Kingdom’s decision to vote leave in Thursday’s European Union referendum is still in full swing.
Whatever happens it seems the after effects of this historic referendum will be felt for many weeks and months to come. We have already seen the resignation of Prime Minister David Cameron, lead leave campaigner Boris Johnson stating that the UK will “intensify” relationships with the EU, Chancellor George Osborne declaring that the UK is ready to move forward from “a position of strength” and mass resignations from the shadow cabinet along with a possible vote of no confidence in Labour leader Jeremy Corbyn – and the referendum result was only unveiled three days ago.
To get his views on the referendum result and what the UK can expect moving forward, we spoke to David Smith, Economics Editor at The Sunday Times, who first gave us his reaction to the vote in favour of leave:
“I have to say that I was surprised,” he said. “I probably believed the polls a little too much because, despite them suggesting a large lead for Brexit early last week, as the vote got closer they moved back rapidly in favour of remain. This seemed to fit the more plausible story about people being concerned about the risks and therefore more likely to vote for the status quo.”
The economic consequences of the decision to leave the EU has been one of the main topics that the media has focused on and David suggests that the result will “inevitably lead to slower growth than we’d have otherwise had”.
“From a business perspective it’s the uncertainty which is the greatest problem,” he said. “I’ve heard a lot of stories about companies which had delayed investments until they knew the result and now will probably not go ahead with them and might not go ahead with planned recruitment programmes either.”
There was turmoil in the markets on Friday with the pound falling to a 31-year low as the results confirming a leave vote came in. However, the markets have rallied and David told us that “comments from the Bank of England’s Mark Carney and David Cameron were quite reassuring” and that “although the FTSE fell very sharply initially, it ended up not spectacularly down”.
He added: “I don’t think the initial effects of the markets fully captures it though as they are still wondering about the extent of the damage. I think there are likely to be a series of effects over the coming weeks and months as there is going to be a lot of political uncertainty, questions around whether there will be a general election with a new Conservative leader. It’s certainly not going to be a one day only market reaction.”
The referendum has arguably brought up more questions than answers, with Scotland and their possible independence high on the agenda once more after the country resoundingly voted to remain in the EU.
On this subject, David told us: “I was strongly opposed to Scottish independence at their referendum, but you couldn’t blame them now. No local authority in Scotland did anything other than vote to stay in the EU, which is in stark contrast to most of England and Wales.
“I think they have a good case for it now but unfortunately the economics seem to be against it, partly because of oil prices, although politically the case seems strong. If the referendums had been the other way around, with the EU referendum and then the independence vote, I think people would have gone for it in huge numbers.”
David went on: “It is very ironic how it has all turned out as a number of powerful former European Commissioners said that if Scotland voted for independence then they would have to renegotiate their membership of the EU. The language used then was very similar to that used by President Obama, but this time it had the opposite effect.”
This is an issue that has the potential to have long lasting effects across the board, with many more twists and turns still to come. Summarising his thoughts on the matter, David said: “Voting leave has all sorts of repercussions in the UK and potentially elsewhere in Europe too. You never know where this is going to end up.”