The people of the UK have voted to leave the EU. But what does this mean for organisations in your industry?
While each industry will be impacted differently, all face increasing uncertainty. It is important that you stay calm, review contingency plans and assess the possible implications – there will be risks and opportunities from this decision.
We see our role as helping you navigate and shape this environment, and our international advisers are well placed to help you achieve your ambitions. These viewpoints outline key considerations for organisations working in the following industries: energy and natural resources, financial services, healthcare, not for profit, public sector, real estate and construction, and technology, media and telecommunications.
We will be sharing further insights over the coming months as the UK's path to exit from the EU and its implications become clearer.
Energy and natural resources
The most immediate impact of the Brexit vote is uncertainty, but the energy and natural resources industry is well used to that.
It is too soon to say exactly how the Brexit uncertainties will manifest themselves, but it’s worth remembering that the UK energy market is largely domestic. UK policies are often more relevant than EU ones. Uncertainty can bring opportunity – especially in an industry that is already in need of investment. Combine this with the likelihood of lower asset prices, at least in the short term, and the UK energy sector could well be of interest to investors, post-Brexit.”
Kevin Schroeder - Global leader of energy and natural resources
Financial services organisations should calmly map and assess the specific implications for their business against the changing landscape. We believe initial work should focus on two broad areas:
Reviewing the regulatory impact (principally ‘passporting’). In particular non-EU financial services companies currently using the UK as a gateway to the EU will need to monitor the situation closely.
Assessing the impact on the macro economy of the UK and the remaining EU 27 member states. In particular, financial services organisations should consider their exposure to medium term sterling and Euro volatility; how exposed their business model are to the EU; what protective measures need to be put in place; and how to manage customer communication.
Chris Tattersall - Global leader of financial services
The decision to exit the EU by UK voters’ will likely mean changes for the NHS (National Health Service), pharmaceutical companies, the drug approval process, and others. While it is impossible to determine the full scale of the impact, we anticipate some of the following areas will be effected:
Regulatory upheaval: the UK would no longer be part of the EU's centralised regulatory and market authorisation process. There are a number of complications associated with this including delayed drug approvals and an increased compliance burden.
Decreasing research funding: approximately 16% of funding for UK life sciences companies comes from EU research grants. Brexit could sever this funding stream.
Access to talent: both the NHS and pharmaceutical companies face this challenge. The NHS will increasingly struggle with access to affordable talent, while pharmaceutical companies could see scientists emigrating elsewhere in the face of increased regulation and decreased grants.
Anne McGeorge - Global leader elect of healthcare
Not for profit
The not for profit sector is varied, there is no one-size fits all and a wide range of relationships exist internationally and with the EU. The sector benefits hugely from the free movement of talent, increased connectivity and access to funding that EU membership brings and will want to protect those relationships. We believe the sub-sectors could be impacted in the following ways:
Charities: organisations dependent on EU grants must establish alternative sources of funding.
Higher education: has well-established international collaborations and must consider alternative research funding streams, which could impact talent recruitment.
Social housing: impacts will vary depending on their reliance on overseas investment, labour from Europe and the exposure to market sales. The sector relies heavily on funding from the institutional financial system and, more recently, the European Investment Bank (EIB).
Carol Rudge - Global leader of not for profit
Real estate and construction
Brexit uncertainty sent a ripple across Europe and other major global markets. As the fifth largest economy there are strong correlations between the health of the UK and other countries. From a real estate and constructive perspective we are starting to see negative effects on UK house builders – first by possible future shortages in skilled migrant workers and second by restrictions on homeowner mortgages.
The immediate impact of Brexit was to put many transactions on hold – some may even be aborted. Listed UK property companies also saw significant falls in share price value but with tentative recoveries. But all in all the UK real estate market remains strong and we’ve already seen increased interest from opportunistic investors. Market volatility caused by the Brexit announcement may well continue, but it's worth remembering that volatility also creates opportunities.
Sian Sinclair - Global leader of real estate and construction
Technology, media and telecommunications
The result of the referendum was a disappointing one for the technology, media and telecoms (TMT) industry. Surveys show that three-quarters of the UK technology community favoured staying in the EU. And soundings of the UK telecoms sector reveal a general belief that Brexit will fundamentally affect a broad spectrum of business and society.
Uncertainty will be the watchword as companies and communities around the world monitor what promises to be a multi-year process of separation. But in the face of this upheaval, it is important to stay calm, review your contingency plan and review the risks and opportunities this creates.
Steven Perkins - Global leader of technology, media and telecommunications
Despite the current uncertainty, one thing is known – the financing of public services over the medium term is inextricably linked to the strength of the British economy. Since Brexit was announced, the UK government has abandoned its target to restore government finances to a surplus by 2020. In a post Brexit world, the following five factors are under the microscope more than ever: government policy, access to funding, overseas aid, impact on international institutions and access to talent.
Scott King - Global leader of public sector