The people of the UK have voted to leave the European Union (EU). The margin of victory for the ‘Leave’ camp was narrow, at 51.9% to 48.1%, but the turn-out of 72% was high by the standards of recent General Elections. The UK will be the first member to leave the Union and economics aside, the conflicting opinions of EU leaders on how this bitter divorce should take shape, is a clear indication that the UK’s Exit from the European Union will by no means be quick simple or easy.
Following a failed campaign to stay in the EU, the Prime Minister quickly announced plans to leave office, stating that the process to exit would be instigated and negotiated by his successor - expected to be in place by 9th October 2016. There may be a period of informal negotiations after which the formal exit process will begin by invoking Article 50 of the Lisbon Treaty. The delay will give the Government a window in which to plan its preferred exit strategy and simultaneously ensure that the earliest possible EU exit date will not be until October 2018.
The EU referendum results revealed stark differences across the UK, both at regional level and by age demographic. Only London, Scotland and Northern Ireland voted in favour of ‘Remain’, with all other regions of England, as well as Wales, voting by clear margins in favour of ‘Leave’. Analysis of the vote by age also illustrated a clear division of judgment and opinion between the generations. A YouGov report stated that 75% of 18-24year-olds and 56% of 25–49 year-olds voted in favour of Remain. Disgruntled Millennials, robbed of their preferred result to remain within the European Union have made it clear that the older generation’s vote to Leave, has in their mind ‘ruined the future for the younger generation’.
Regardless of the vote outcome, one fact is clear - this country could not be further away from the ambition by both sides of the campaign, to stand proud in the form of a United Kingdom. It has instead revealed itself as a fragmented nation, divided in opinion and beliefs which are largely influenced by geographical location and age demographic.
Stabilising the economy will be the key focus of policymakers in the short-term. The process will involve maintaining the orderly operation of the financial markets to minimise effectively the negative impact on pensions and investments.
Financial services organisations are being urged to operate as business as usual, however, this prolonged period of uncertainty will undoubtedly present financial planning opportunities. Maverick individuals wishing to take advantage of these volatile markets will need nerves of steel, an unprecedented tolerance to risk and are best placed to seek advice before chasing the potential financial rewards from this Fallout.
Let’s see what happens next.