Extra funds, pre-written statements and plans for late-night vigils by teams of consultants are being done by British companies as preparations for the possibility that the country will vote to leave the European Union.

A last-minute flurry of preparations in the corridors of “UK PLC” has been prompted by the prospect of a “Leave” vote which has come into sharp focus in the final week before Britain’s June 23 referendum on EU membership.

Assuring customers, employees and investors that there will be near-term business continuity in the event of an “Out” vote through effective communication occupies much of the focus of such companies. The exit or “Brexit” from the 28-country bloc would have to be negotiated by Britain in two years time.

Major consequences for trade, the economy and migration in Britain and elsewhere along with the currency market due to a vote for a Brexit would have to be managed by the treasury department which will also be working overtime.

Since any post-Brexit picture is unclear and opinion polls had until recently suggested the “Remain” camp was comfortably ahead, many of the companies have yet to work out detailed plans.

However there has been a swung toward the “Leave” camp in the latter stages of campaigning which have forced some to have sprung into action.

“The nearness of the vote and sudden increased likelihood of Brexit has definitely sharpened client appetite for draft statements,” said a senior executive at a public relations firm, one of three who said this week there had been an increase in client requests for communications advice.

According to a survey published in April by the Chartered Institute of Internal Auditors, more than three-quarters of Britain’s FTSE 250 companies had not made any contingency plans for a possible exit as of February.

While there was acute ubcerta8inty at that time, more than 60 percent said they planned to do so.

Violent currency swings on the morning of June 24 are the top concern for many export-orientated multinationals in the FTSE 100 index.

“The biggest short-term impact and the biggest headache for us is going to be sterling,” said the head of strategy at one top-10 FTSE company.

A short-term fall in sterling on a “Leave” vote would make exports cheaper and could boost sales, while a “Remain” vote could see the currency jump, even though chief executives generally back “Remain” on the grounds that unfettered access to Europe’s market of about 500 million consumers is good for business.

For companies like engineering firms Rolls-Royce and BAE Systems, pharmaceuticals giant GlaxoSmithKline, drinks group Diageo, and British American Tobacco, either way, it spells volatility for sterling-denominated earnings at businesses.

Many corporate treasury departments were now escalating currency decisions up the chain of command, said Richard De Meo, managing director of Foenix Partners, a foreign exchange specialist for British companies.

“There can be serious business risks to them sticking to long-term policies in a situation like this. They are in communication with the chairman, the MDs (managing directors), the board,” he said.

There would also be concern about what a Brexit would mean for the rest of the EU, said a FTSE 100 finance director.

R important part of it and you risk a domino effect. We’re in the hands of the gods.”

(Adapted from Reuters)

Categories: Economy & Finance, Uncategorized