What is certain is this event has stirred up the world. What is uncertain is how exactly it will impact our business and life. While the dust is up in the air, we can try to envision a future through the dust.
The natural reaction of most human being is that we don’t like change and we don’t like uncertainty, thus the current sentiment is mainly a negative one.
1.British people have become poorer overnight (Pound dropped 15% at its peak)
2.UK’s stock market dropped – signaling that Mr. Market is not supportive Brexit.
3.Over-seas investments in UK manufacturing sector are expected to flatten out.
4.Morgan Stanley denies moving jobs to Dublin and Frankfurt, but everyone is expecting a job cut in the City of London.
Could this trigger a dynamics of trade protectionism? Which may lead to another cycle of global recession? Resulting in mass unemployment and consequently social unrest?
While we must stay alert to the changes confronting us, we shouldn’t focus on the negative possibilities alone, since changes present opportunities.
1.The British people have become poorer overnight (The Pound dropped 15% against the US dollar at one point) -> a devalued currency makes British exports more competitive. (.e.g. education, services industries, manufacturing).
2.UK’s stock market dropped signaling that Mr. Market is not supportive of Brexit. -> European stocks have dropped even more than the UK stock on the same day, it may mean that the market has more faith in the UK economy than in the EU economy.
3.Over-seas investments in the UK manufacturing sector are expected to flatten out.-> this is bad news for tier 2 and 3 cities, rebounding from decades of industrial slowdown. However as mentioned above a factorable exchange rate of the Pound may increase the competitiveness of UK product.
4.Morgan Stanley denies moving jobs to Dublin and Frankfurt, but everyone is expecting a job cut in the City of London. -> The City of London has always been ‘adept at adapting’ to challenging and changing circumstances, the infrastructure within the City is not easily shifted to Frankfurt or Dublin.
5.Could this trigger a dynamics of trade protectionism? Which may lead to another cycle of global recession? Resulting in mass unemployment and consequently social unrest?-> trade protectionism happens in every recession, every time when people feel insecure.
Many are asking if the UK can have another Referendum to overturn Brexit. Technically, the answer is yes but in reality it is very unlikely, both the Remain Camp and Leave Camp have agreed that they will stand behind the result of this EU referendum. So let’s believe it is going to be the case. What is the impact it will bring to Shipping?
1.In the short term, very limited impact, it will be at least 2 years until the UK and EU settle all the negotiation, before this happens, it will be difficult to quantify any trade impact. Over the space of two years, how EU would look like is also an huge uncertainty.
2.Trade protection with EU may expand British trade with other destinations which in turn could have an positive affect on the shipping demand in relation to the UK.
3.The shipping industry is mostly regulated by the international bodies, like IMO; EU has limited impact on global shipping.
4.Shipping Finance and other services industries that are clustered in London will face a shakeup. There is limited choices for huge international banks to find a city to put their headquarters, as it requires transparent and sophisticated legal system, insurance system, strong central bank and professional and unbiased media. If London’s role on those areas are going to be weakened, it will be a capital and talent drain in London, which the UK government will take whatever it cost to prevent it from happening.
It is pointless to judge ‘Brexit’ itself as right or wrong. The impact of this event will not be only limited to the UK, or the EU, it will have a profound impact of the global economy and political arrangement. Therefore it is not only the responsibility of the UK but of every county, and of us as a collective to try to make the best of this development.
When you look at the demographic of the vote, the younger generation voted to stay and the older generation, particularly those outside of London, voted for the separation. The younger generation has demonstrated clearly what is evidence to us all in the shipping industry that prosperity to a large extent depends on trade, integration, open boarders, and exchange goods and ideas. It is our responsibility as the member of shipping industry to act as individuals and as a collective in maintaining this world view as the fundamentals of global trade.
Above comments are not Drewry views, but based on conversations hold after the Brexit with colleagues and friends in London and Asia.