Brexit latest: reaction from the UK

London

All times UAE

1.35pm


Aviva, one of the biggest insurers in the UK, said that the vote to leave the EU would have no significant operational impact on the company.

In a stock exchange statement, the company said: “Aviva’s operations in the UK and its other subsidiaries in the EU are well capitalised and continue to trade as normal. Aviva continues to be supervised by the PRA/FCA as lead regulator and Aviva’s European subsidiaries are incorporated and regulated locally and principally trade in their local market.

“At Aviva’s 2015 preliminary results, published in March 2016, Aviva reported a Solvency II ratio of 180% and a surplus of £9.7 billion [Dh52.78bn]. Aviva has one of the strongest and most resilient balance sheets in the UK insurance sector with low sensitivity to market stress and over the last four years Aviva has tripled its economic capital surplus.”

1.30pm

IAG, the owner of British Airlines, says that it expects to see a smaller increase in profits this year, because of the market volatility surrounding the referendum.

The airline group said: “The vote to leave the European Union will not have a long-term material impact on its business. In the short term, however, in the run up to the UK referendum during June, IAG experienced a weaker than expected trading environment. Following the outcome of the referendum, and given current market volatility, while IAG continues to expect a significant increase in operating profit this year, it no longer expects to generate an absolute operating profit increase similar to 2015.”

11.15am

The budget airline easyJet, one of the most vocal Remain campaigners, has released a statement: “easyjet notes the result of the referendum in favour of the UK leaving the EU and is confident that it will not have a material impact on its strategy or its ability to deliver long term sustainable earnings growth and returns to shareholders.

“easyJet has been preparing for this eventuality in the lead up to the referendum vote and has been working on a number of options that will allow it to continue flying in all of its markets.

“easyJet’s initial focus will be to accelerate discussions with UK and EU governments and regulators to ensure that the UK remains part of the single EU aviation market. This would enable EU airlines to fly freely within the UK and between the UK and EU, allow UK airlines to fly freely across Europe and would ensure that consumers continue to benefit from low fares and would mean easyJet and other airlines can continue to operate as they do now. easyJet will also continue to develop its alternative options that will fully maintain its existing network and operations.

“easyJet is confident that its unique network, digital leadership, cost advantage and financial strength will enable it to continue to execute on its strategy and to deliver long term sustainable earnings growth and returns to shareholders.”

Carolyn McCall, easyJet chief executive: “We remain confident in the strength of easyJet’s business model and our ability to continue to deliver our successful strategy and our leading returns. We have today written to the UK Government and the European Commission to ask them to prioritise the UK remaining part of the single EU aviation market, given its importance to trade and consumers.”

11.07am

James Roberts, the chief economist at Knight Frank, property surveyor: “The chances of a technical recession, as business investment is curtailed, is high and exporters and financial services firms will be in the forefront of the downturn.

“In the light of the above risks we expect the Bank of England, seasoned by the experience of Global Financial Crisis, to respond quickly. An interest rate cut of 25 basis points is a strong possibility at the Monetary Policy Committee’s July meeting, or perhaps earlier if required. We may also see a return of quantitative easing, if there are signs that investment is deteriorating. This should in our opinion help restore confidence as the summer progresses.”

Grainne Gilmore, the head of UK residential research at Knight Frank on the housing market: “In the short-term, consumer confidence is likely to be knocked by the continued uncertainty, especially with regards to trade. This may weigh on activity in the market, especially those making discretionary purchases, which could result in a slip in transaction volumes, and prices. However, uncertainty could also result in a further dampening of homes coming onto the market, and this lack of supply will provide a floor under prices.”

11am

Tim Martin, the founder of the Wetherspoon pubs and restaurants chain and one of a few prominent Leave campaigners from the business community: “The referendum result will enhance freedom and security.

“Some people will now be anxious, but concentrating on these immensely important factors will provide reassurance. Anxiety about the economic effects of independence during the campaign was misplaced.

“The UK will thrive as an independent country, making its own laws, and we will work with our good friends and neighbours in Europe and elsewhere to ensure a positive outcome for all parties. The most important factor now is to work together for our mutual benefit.

“On a practical level, from my experience of running a business, the key factor now is to avoid the appearance and the reality of rushing to ‘do a deal’ with the EU.

“There is plenty of time and the UK is in an immensely strong position. A period of calm, reflection and discussion will be beneficial.”

10.54

Douglas Fint, the chairman of HSBC, whose shares fell more than 3 per cent in Hong Kong overnight: “We are today entering a new era for Britain and British business. The work to establish fresh terms of trade with our European and global partners will be complex and time consuming. We will be working tirelessly in the coming weeks and months to help our customers adjust to and prepare for the new environment.

“As one of the largest, most stable, liquid and prudent financial institutions in the world, HSBC is well placed to support our customers and the markets as they deal with the challenges that will arise. Our commitment to British businesses, customers and staff in the UK remains undiminished.”

HSBC considered relocating its headquarters to Asia last year but eventually ruled it out so its commitment to the UK is significant.

10.25am

From Chris Ireland, UK cheif executive of JLL, property surveyors: “Such a major change will inevitably create uncertainty in the economy and real estate markets. In the event of a well-managed exit these impacts will be largely confined to the UK.

“In the short term we may see a weakening in occupier demand. The impact on rents may be limited by tight supply, but activity will be adversely hit while initial uncertainty about direction and timing continues. Investor sentiment may also remain subdued in the short to medium term. For property markets, the initial correction may be most severe but should be followed by an upturn as opportunities re-emerge in UK core markets and benefits of weak sterling are recognised.”

Adam Challis, the head of Residential Research, on residential values in London: “The London housing market will feel the effects of the vote Leave decision more deeply. The interconnected trading relationship between London and the rest of Europe means the implications are more complex. This will exacerbate the uncertainty for London’s homeowners. Paradoxically, investors may well identify opportunities in this market over the short-term, particularly international purchasers that can benefit from the currency arbitrage that has opened up by a weaker pound sterling.”

10.13am

Carolyn Fairbairn, the Confederation of British Industry director general:“Many businesses will be concerned and need time to assess the implications. But they are used to dealing with challenge and change and we should be confident they will adapt.

“The urgent priority now is to reassure the markets. We need strong and calm leadership from the government, working with the Bank of England, to shore up confidence and stability in the economy.

“The choices we make over the coming months will affect generations to come. This is not a time for rushed decisions.”

10.07am

Dr Adam Marshall, the acting director general of the British Chambers of Commerce: “In the wake of the electorate’s historic decision to leave the European Union, the immediate priorities for UK business are market stability and political clarity.

“Firms across the UK want an immediate and unambiguous statement from the prime minister on next steps, along with a clear timeline for the UK’s exit from the European Union.

“Business will also want to see a detailed plan to support the economy during the coming transition period – as confidence, investment, hiring and growth would all be deeply affected by a prolonged period of uncertainty. If ever there were a time to ditch the straight-jacket of fiscal rules for investment in a better business infrastructure, this is it.”

10.05am

Mike Thompson, chief executive officer of the Association of the British Pharmaceutical Industry, said the UK’s vote to leave the European Union “creates immediate challenges” for the industry.

“The voice of the British people has been heard. This creates immediate challenges for future investment, research and jobs in our industry in the UK. With that being the case, we are committed to working closely with the government to agree what steps need to be taken to send a strong signal that the UK is open for business,” said Thompson in a statement.

The pharmaceuticals industry is the UK’s biggest investor in research and development and its leading manufacturer and exporter.

9.10am

Piers Hillier, the chief investment officer at Royal London Asset Management: “On the back of this morning’s result we expect the UK will fall into a recession. Unfortunately I see unstable market conditions lasting for between three and five years whilst new trade arrangements are drawn up.

“It is our view that the UK Government will be left with no choice but to stimulate the economy through fiscal and monetary means, flooding the system with liquidity if necessary.”

8.45am

Howard Archer, chief UK + European Economist, IHS Global Insight

is cutting its GDP growth forecasts to1.5% (from 2%) for 2016, 0.2% (from 2.4%) for 2017 and 1.3% (from 2.3%) for 2018

“Major economic and political uncertainty will be a fact of life for some considerable time, likely weighing down markedly on business and household confidence and behaviour, so dampening corporate investment, employment and consumer spending,” Archer says.

He adds that the housing market could suffer a marked downturn. Financial sector activity in the City of London may well be hit quickly. Foreign investment into the United Kingdom is expected to suffer (both direct and portfolio).

He also predicts that the Bank of England could cut interest rates from 0.5% to 0.25% before long and could restart quantative easing.

The Monetary Policy Committee will be prepared to look through any near-term spike in inflation from a weakened pound. The Bank of England will likely take the view that the weakened growth outlook means it will be harder to hit the 2.0% inflation target in 2 years’ time. Of course, the Bank of England’s position may well be made even harder if there is a sharp flight of capital from the UK

8.30am

Michael Hewson, chief market analyst at CMC Markets, says: “The FTSE100 looks set to open down 468 points from its overnight close at 6,338 at 5,870 as markets around the world weigh up the consequences of a vote that looks set to ripple across the EU and the world.

Banking stocks are likely to be a particular concern given the weakness of the banking sector in Europe and the linkages between the UK and Europe.

Gold has surged back to $1,300 an ounce, as investors weigh up the prospects of what might happen with respect to UK Prime Minister David Cameron’s job prospects.”

Equity markets:

FTSE100 is expected to open down 468 points at 5,870

DAX is expected to open down 650 points lower at 9,600

0

Share This Post