If the Global Financial Crisis taught us anything, it was surely that “confidence” is the life-blood of modern capitalism. Once confidence in sub-prime loans wavered, the edifice of global finance endured a major earthquake and, it can be argued, we are still suffering from aftershocks of varying magnitude (vis Deutsche Bank’s current troubles). Fracking for oil is controversial in many nations and attempts to exploit British shale-oil deposits were said to have triggered a minor earth tremor in the immediate vicinity – surely, the UK in/out referendum on the nation’s continued membership of the EU is another (uniquely British) unexpected tectonic shift. Having survived the initial event, business and society at large is now having to deal with a significant crisis in confidence.
There are only three possible scenarios for the UK’s future relationship with the EU; a “hard Brexit” which sees the UK end freedom of movement of EU citizens to the UK and ends its access to the free market; a “soft Brexit” which maintains UK access to the single market (and, crucially, passporting) but fails to deliver on restricted migration; or the UK continues to be a member of the EU and the outcome of the (non-binding) vote is effectively set aside.
According to the CBI, optimism in the financial services sector has fallen for a third consecutive quarter; its worst performance since 2009. Of 115 firms surveyed, 28% were more pessimistic about their prospects whilst 15% claimed to be more optimistic, but 40% of respondents reported “healthy profits” in the most recent quarter.
The CBI’s chief economist Rain Newton-Smith noted that: “With firms voicing strong concerns about the impact of Brexit, especially the risks to the wider economy in the years ahead, the government must allay their unease with clear plans for negotiations to leave the EU". The lady is not alone in expressing this sentiment!