The British people’s decision in last week’s referendum to vote in favor of leaving the European Union was in the end such a shock that the chances are that little constructive work was done in offices throughout the country and beyond on Friday. While developments since then have done little to clarify or indeed improve the situation, businesses cannot afford to keep being distracted.
The result – while not entirely a shock since polls had consistently said it was too close to call – became one because for some reason in the immediate run-up to the vote markets decided, like the bookmakers, that the people would opt to stick with what they knew, despite reservations. Talk about wishful thinking.
Much was made in the campaign of the economic consequences of a vote to leave the E.U., with both sides trading statistics that probably confused rather than enlightened ordinary people. What was less discussed – although it was an obvious issue – was the political aspect. Given the series of developments over the weekend, this seems to have even been given little attention by the politicians themselves. It is just one of the many ways in which there has been a lack of true leadership over this issue. As is now clear, and was pointed out by many ahead of the vote, the issue was just too complex to be reduced to a simple yes/no question. The consequences were also potentially too grave for a simple majority to be enough for victory. It would not have been unreasonable for the Government to have imposed a requirement of something like a two-thirds majority. Finally, it was always clear from the polls that there was a good chance that – however the rest of the country voted – Scotland and Northern Ireland – the two parts of the U.K. where nationalism was strongest – were likely to vote in favor of staying within Europe. Somebody in Whitehall must have been looking at the options should this be the case, but nothing that has happened over the weekend suggests that firm plans for dealing with such a situation are in place. Instead, the nationalist leaders in Scotland and in the Republic of Ireland have been predictably opportunistic in adding to the crisis by seizing the initiative and talking of fresh independence campaigns. On top of all this, both major parties are engulfed in leadership struggles. And the process of negotiating an exit from Europe has not even started yet.
Of even greater importance to most people (whether they realize it or not) is the economic fall-out, which is likely to continue in the same vein as was seen on Friday. Already, because of the tumultuous fall in the value of sterling, ordinary people are seeing the cost of holiday money and the price of petrol rise at the same time as the value of their pensions and other investments fall. Countering what could soon look like the financial crisis of 2008 is going to require deft and strong economic leadership. But it is also going to need clear and calm thinking – and appropriate action – on the part of business leaders.
In many ways, the E.U. result is typical of the sort of forces that have become a feature of the modern business environment. It is one of those situations or trends that are sort of known about but can still strike unexpectedly and in hard-to-predict ways. Optimists might take the view that this is just the shock that was needed to wake up leaders in Europe, North America and elsewhere to the threat posed to a fragile economic and political stability by the rise of populism in response to such factors as globalization and mass migration. Pessimists will assert that this will kick off a prolonged period of economic instability with perhaps more political and economic shocks to come. If history is anything to by, the reality will probably be somewhere between the two with elements of both at different times.
Effective leaders will have spent their weekend deciding on exactly what message they are going to give their employees in the days and weeks ahead. Regardless of their own views and whether or not they publicly backed one or other side, they are going to have to ensure that everybody is focused on the fundamentals of ensuring the survival of their businesses. There will inevitably be some tough decisions to be made. But turbulence always throws up opportunities.
One of the reasons the campaign worked out the way it did was that nobody was really able to make a convincing argument on one side or the other about the likely effects on business and the economy in general. So it will be a while before any clear sense of that emerges. Even then, the situation could be muddied by other factors, such as the signs of recession that many were seeing evidence of even before the vote.
Just as the world’s political leaders need to be wary of becoming followers and finding themselves supporting populist ideas in the hope of surviving, their business counterparts should bring to the fore those virtues they would have us believe are their innate characteristics. Things like courage, boldness, wisdom, insight. And in particular calmness under fire. But they also need to realize that this is something of a wake-up call to them as well. There is strong evidence to suggest that for many the referendum was about more than membership of the E.U.; it was a lightning rod for disaffection with the effects of globalization and technological development on the vast numbers of disaffected voters in industrialized countries and the lack of any apparent attempt on the part of politicians to do anything about them. Business needs to find a way of better balancing its financial interests with those of the communities in which it operates. But first leaders are going to have to strive to deal with whatever comes their way clearly and decisively.
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This article was written by Roger Trapp from Forbes and was legally licensed through the NewsCred publisher network.