With the markets already in turmoil and the value of sterling dropping to its lowest level for more than 30 years in a single day, Professional Services firms are surprisingly well placed to weather the storm of the uncertainty facing Brexit.
Indeed, many professional services firms will see a rise in activity as companies approach them to seek advice on the unravelling 40 years of EU membership. Until Britain formally leaves the EU, current legislation will continue but after Brexit, there will need to be a substantial review of the legislation.
Many law firms have already set up Brexit ‘war rooms’ to assist clients with initial queries, fears and concerns but it is the longer term strategy that needs to be discussed.
Lawyers will play a crucial role in helping clients navigate one of the largest programmes of regulatory and legislative reform ever seen.
Accountancy Practice firms, particularly the Big 4, could pick up extra business as companies look for support and advice when planning strategic organisation.
Practices across the UK will be looking to answer their clients’ questions and concerns about what will happen to tax and accountancy. As VAT is a European tax, what will this be replaced with?
There is also the question of the impact on British business and accountancy firms with UK government policy changes. Simon Hunt from PWC said on Friday, ‘there will be months and years ahead that will bring change but UK business is adaptable and while it may need to change, it will continue'.
Property firms are the most likely to pull back on investment opportunities while they ‘wait and see’ what the next quarter brings, what the impact of a new Prime Minister will be, as well as what will happen when Article 50 is triggered and the two years’ extraction begins.
Brexit will undoubtedly cause uncertainty in the economy and real estate markets while direction and timing issues continue. Investor sentiment will remain subdued in the short to medium term. The initial impact on property markets may be severe but as has been seen previously, opportunities for investing will re-emerge and there will eventually be an upturn in markets.
There will be opportunity to invest in property. Mark Carney has stated that he will provide support to ensure that the UK is not pushed into a full blown recession with quantitative easing.
There were reports at the weekend of the possible further reduction in the base rate from 0.5% to 0.25% if not
0%. The key will be the speed of the timetable for an EU exit strategy as well as clear direction around what this will look like.
The key question professional services firms are asking
The most important question for most professional services firms is whether Britain’s exit from the EU will weaken London’s position as one of the world’s key financial and business centres.
London is used by many international companies as a gateway to Europe where, according to UK government data, ‘London boasts more European headquarters of non-EU corporations than anywhere in the world.
Nevertheless, there remains an atmosphere of cautious optimism among Professional Services firms that the UK will continue to play a key part in the global markets over the years to come. Most PS firms operate in a lean manner without the boom and bust, hire and fire mentality of Financial Services.
There may well be a rocky road ahead in the short term until a clear exit strategy has been decided. This will then allow PS firms to do their job and steer UK companies through the turmoil of markets to a new normality in the years to come that could lead us towards further innovation and enterprise in the UK.