Martin Flanagan: Brexit unleashes profit warnings
Profits warnings attributed or partly attributed to Brexit are going to become rife quickly. The latest yesterday were from budget airline EasyJet and upmarket London-focused estate agent, Foxtons.
Last Friday, as the Leave result of the UK’s European Union referendum became clear, British Airways and Aer Lingus operator IAG was quick off the tarmac in partly blaming lower demand in the run-up to the EU referendum for its own profit warning.
Such warnings were inevitable. Economic and consumer uncertainty means fewer consumers and businesses spending cash across all sectors, from buying clothes to going on holiday, from moving house to getting a new car, from green-lighting a new office block to installing a costly new IT system.
As such, businesses across the spectrum are looking at reduced demand, feeding through into reduced revenues and diminished earnings and dividends, as well as buffeted pensions.
Just as in a recession journalists get used to writing essentially the same story across different companies and sectors, I think the Brexit effect – both leading up to and, more importantly, in the wake of the vote – will be with us for a very long time.
It is the obvious ramification of the sheer enormity of the decision that the electorate, particularly the North of England electorate, has taken.
In that sense, it is a tad bizarre to see the Tory Remain politicians who said we were threatened with a calamity if Brexit won the day now saying the UK has the preparations in place to handle the volatility to come.
The nation is still in shock, and there seems a definite feeling of rattled politicians winging it on the issue. Talk about smiling through the tears.
What will be the steady stream of profit warnings from business will just add to the wailing background mood music. And, on occasion, Brexit may even provide a dubious fig leaf for managements who were not managing the business too well anyway.
The vast majority of warnings, however, will be kosher, business being in the firing line of the constitutional changes.
Meanwhile, the UK has democratically voted to “Take Back Control”, and the first test of whether that game has been worth the candle will be whether we can control the crisis that has clearly been unleashed.