Got A Brexit Plan? Hold Up Your Hand. If Not, Carry On Panicking!

If anyone has a plan, now would be a good time to speak up. For any British brand or a brand heavily invested in Britain, there appears to be nothing ahead but uncertainty, so it's little wonder that one in four business are planning recruitment freezes. Holding companies have no idea what impact Brexit will have on how British agencies are able to compete in the EU, and at the same time, their clients have to face up to the likelihood of a short- to medium-term recession in the UK, brought about by uncertainty leading to a decrease in consumer spending. 

In the first quarter, IPA Bellwether figures showed only showed a 3% difference in the proportion of marketers expecting budgets to go up rather than down. The lacklustre expectation was attributed to Brexit concerns. Now that this has happened one can only presume that budgets will be slashed because all the indications are that consumer spending will be on hold until there is a clearer direction to what comes next for the UK.

The trouble is, how can we expect to get a direction when it will be led by politicians who had no plan up their sleeve for Brexit. The UK is starting with a blank canvas and before the country moves on, the issue of replacing David Cameron has to be dealt with -- as does, it seems increasingly likely, either replacing or reselecting the leader of the opposition, Jeremy Corbyn. This will take weeks of wrangling and could well take us in to October's party conference season. 

There is talk of opposing the vote, but it seems unlikely that a referendum verdict -- which was legally only "advisory" -- will be feasible. Believe me, when i was talking with marketing pals this weekend at a big bash, the talk was of nothing other than a faint hope that parliament would go against the decision and restore common sense. It's unlikely, however.

Instead, it's now hitting home that it's going to be very difficult to get a free trade deal with the EU that is acceptable and in tune with the result. There is no hiding the fact that immigration was the number one issue on June 23rd -- and so the country will have to pursue negotiations with the EU that do not allow for free movement of people. So, that means you can't have the free movement of goods and services. That means no free trade deal. Doing "a Norway" and simply paying for free trade with a hefty cheque and the acceptance of unlimited immigration appears to not be an option. Unless the British public is so stupid, of course, that it can be sold a plan where we pay more to be in the EU yet still the downside many voted against. 

The reason why Britain won't get an amazing deal is blindingly obvious. If the UK leaves and gets an amazing offer to independently limit immigration yet still have free access to EU markets, then everybody would be at it. There are already calls in France, Italy, Denmark, The Netherlands and Sweden for EU membership votes, and autumn is approaching. It's the time of year when Brussels politicians and financiers return from holiday and renegotiate debt deals with members who have been bailed out. Greece stands out as the worst case, but don't be surprised if there is also friction with debt-riddled Spain, where things are so tough that only one in two young people is likely to find a job. Would Greece seriously want to stay and mortgage off more of its future if countries to the north of Europe are considering leaving too? Would Spain feel that same way?

No, the UK won't get a good deal. It may well be a case of the EU cutting off its proverbial nose to spite its face, but Brussels cannot offer inducements to other countries to follow the UK's move. The EU will forget about the near €20bn quarterly trade deficit the UK has with member states and instead make the country an example of how lonely it is on the outside. 

There is another major milestone ahead to be aware of. The issue of debt has been swept under the carpet, but it is likely to be back on the table in a year's time when German elections will have been held. The present regime is in favour of renewing loans and carrying on -- a process that can only last so long until German votes revolt. So expect Autumn 2017 to see serious unrest in the EU as sovereign debts are slashed as Berlin takes a massive "haircut." Just see what happen to closer integration and a commitment for new members to join the Euro when German taxpayers see that effectively means them bankrolling the whole ideological show. 

Sorry if this sounds downbeat, but there's no major silver lining. The UK faces a couple of years of being made an example of by its closest trading nations, which, within a year or so will see the contraction of the Euro zone and almost certainly at least another member state or two calling their own referendums on continued membership.

A doughnut will appear with France and Germany in the centre surrounded by a grouping of countries that are keen to be trade partners but without the social, monetary and political integration. So, perhaps, the UK will be seen as a the forerunner of the doughnut's outer layer, but it's a ways off.

In the meantime, the next couple of years appear to be set for lower consumer spending and slashed advertising and marketing budgets. 

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