IT IS just 50 hours since the referendum result was announced. In that time, Britain’s prime minister has resigned, there has been a coup against the leader of the Labour party (still playing out as I write), sterling has had one of its biggest one-day falls in history, the banks are starting to talk about moving jobs to Europe, and Scotland has opened the process of calling a second independence referendum.
The political turmoil was predictable and predicted in this blog. Most MPs backed the Remain case and now have to implement the Leave case. Even the Leave campaigners are balking at invoking Article 50 immediately; David Cameron reversed his position and has left the decision to his successor. That means it won’t be until October. This can be presented as tactically shrewd; there is no rush. Although the rest of the EU is pushing Britain to act immediately, it would seem as if it can’t force the pace. But it also reflects the lack of clarity among those in the Leave campaign about what kind of deal they want; a Norway-style approach (with continued free movement and budget contributions) or complete separation (with restricted access to the single market).
Of course, this politicking only extends the period of uncertainty that will follow the referendum result. The nature of Britain’s trading relationship with the EU will not become clear until late 2018 at the earliest. All the more reason, then, for investors and businesses to delay any decision to put money into Britain; the potential economic damage is greater. Friday’s market moves saw a much bigger (7%) fall in the domestically-focused FTSE 250 than in the more multinational FTSE 100, which dropped 3%.