Brexit bargain-hunters were out in force on Tuesday, mopping up stocks in sectors that suffered some of the worst losses during two days of carnage that saw the UK stripped of its last triple-A rating and $3 trillion slashed from global share values.
By the end of the day, London’s leading share index had recovered all of Monday’s losses and sterling looked to have stabilised, at least for now. While the respite was welcome, no one was foolish enough to declare the crisis is now contained.
The somewhat tired soundbite from business secretary Sajid Javid after a meeting with business leaders was that “Britain is open for business.” Other than a desire for access to the single market, there was no sign of a plan, however.
Rousing themselves from the utter shock of the referendum result, bosses of a number of leading firms issued statements intended to reassure investors and employees that the world had not actually ended.
Some were more convincing than others. Engine maker Rolls-Royce said it remained committed to the UK, where it has more than 23,000 employees, and that there would be no immediate impact on its day-to-day business. As for the longer term, that would depend the new relationships established with Europe and the rest of the world over the coming years.
Noisy fallout
At the bailed-out Royal Bank of Scotland, where shares plunged to levels last seen at the height of the financial crisis, chief executive Ross McEwan said that despite the “noisy fallout” from the vote, the UK remains “a large, well-developed economy with good long-term prospects.”
However, he highlighted what he called “a range of unknowns” over the short, medium and long-term against the current backdrop of political uncertainty.
Uncertainty is putting it mildly. The prime minister is on his way out, the opposition leader has just suffered a huge no confidence vote and the chancellor has lost all credibility.
George Osborne vanished from public view on polling day last Thursday until emerging to make a largely ineffective emergency statement early on Monday. He was out and about again on Tuesday, declaring there was "no disorder" in financial markets, a claim that was greeted with derision by many in the City.
Osborne also warned that the nation would be poorer as a result of the decision to leave the European Union. In an echo of the emergency austerity budget he had threatened voters with in the run-up to the referendum, the chancellor said spending would have to be cut and taxes raised.
Savaged
It was Osborne’s extraordinary budget threat that did so much to damage the credibility of the Remain cause in the final week of the campaign. What’s left of the chancellor’s authority took another knock this week as the normally mild-mannered former Bank of England governor, Lord King, savaged the nation’s finance chief.
Forecasts from the treasury had been exaggerated, King said, and Osborne’s idea that recession could be tackled by spending cuts and higher taxes was “baffling.” As King pointed out, voters do not like to be told that they are idiots.
While many business leaders urged calm, there were plenty with a less rosy view of Britain outside the EU. Small businesses told of orders from the continent drying up overnight and several quoted companies have been forced into profit warnings, including British Airways group IAG, the budget airline EasyJet and the London-focused estate agent, Foxtons. There will be many more warnings to come as the impact of the vote reaches the real economy.
Richard Branson, whose Virgin Money suffered one of the biggest declines in the market sell-off, didn't sugar- coat the Brexit pill on Tuesday. Chinese business partners were already pulling their investment from the UK, he said, warning that "thousands and thousands" of jobs would be lost as a result. His business had just pulled out of one large deal that would have brought 3,000 jobs.
Branson is regularly voted one of Britain’s most admired businessmen and his Virgin empire employs around 50,000 in the UK. But his public intervention in the Brexit debate – he is calling for a second referendum to be held – has not gone down well with Brexiteers, whom he accused of failing to realise what a mess their vote would cause.
As a resident of the British Virgin Islands, it should be pointed out, the billionaire was unable to vote in the referendum himself. Fiona Walsh is business editor of theguardian.com
