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Brexit: Out with the old, in with the new

4 August 2016

New uncertainty

It was a political earthquake felt across the world when on 23 July the UK voted by a narrow margin in favour of leaving the European Union. In the days immediately following the vote, politicians, journalists and stakeholders scrambled to make sense of its meaning and grab the narrative to their own ends.

As the markets took fright and Remain advocates responded with horror, the overwhelming view of the commentariat was that a watershed moment had occurred. British politics felt somehow altered, quite aside from the sudden political demise of David Cameron’s premiership.

While the consequences of Brexit will take weeks, months and years to play out, probably the most significant change was the creation of significant uncertainty.

The vote to leave the EU has potentially reopened vast swathes of ostensibly settled policy, with a massive impact on business operations and finance in particular.

While the very basis of UK economic life is theoretically now in question, in reality it can alter only gradually in a complex and consensual process, given the necessity of creating a sound basis for implementing Brexit.

New Departments

Business strategy is at the centre of the changes taking place as the policy community reorients itself towards Brexit, with the Department for Business, Innovation and Skills undergoing a radical remodelling to create two new departments: the Department for Business, Energy and Industrial Strategy, and the Department for International Trade.

What’s more, the UK now has a specially-created Department for Exiting the European Union, devoted solely to the cause of negotiating the demanded departure. Under the direction that “Brexit means Brexit and we’re going to make a success of it”, this department will be eagerly seeking partners to demonstrate what can be achieved by Brexit Britain and ensure continued popular support.

Working assumptions and old institutions challenged. In particular, the Foreign and Commonwealth Office – home of the UK’s diplomatic community – faces major upheaval as it deals with the dual task of smoothing ruffled international feathers and responding to structural changes at home.

The Government’s efforts to turn the vote for Brexit into a charge towards greater trade development beyond the EU could spell a new focus on the community of English-speaking nations, with key ministers showing definite Transatlantic interests. Cultural similarities and shared heritage make the USA a natural candidate for closer cooperation, with Canada, Australia and New Zealand also in line to benefit.

The new trading aspirations of the departments born out of Brexit also present opportunities for small businesses with distinctive products ripe for export, which could benefit from Government support to expand their exporting horizons and provide UK trade success stories.

In the past, the Government has been keen to highlight the contributions of the UK’s creative industries overseas, and with the Brexit vote doing damage to the soft power agenda, the UK’s media could be well placed to benefit from efforts to emphasise that the UK remains open for business.

The abolition of the Department of Energy and Climate Change, meanwhile, with its remit rolled into the new BEIS ministry, could well signal a reshaping of energy and resources policies in favour of further emphasis on the needs of business.

New opportunities

The role of the UK Civil Service will become ever more important, as it attempts to control the costs and complexities of undoing four decades of legal and economic enmeshment, likely through a large-scale process of transposing laws and regulations. This presents new opportunities for engagement and input, as groups working on each specific area of law search for chances to alter the rules to the competitive advantage of the UK.

Under the Conservatives, the Civil Service has been streamlined, and faces significant resource challenges in tackling the task of implementing Brexit. Thus, for both practical and ideological reasons, private sector expertise will be much in demand over the coming months and years.

After a period of relative quiet over the summer Recess period, expect a series of major speeches during the party conference season in September and October.

Newly-appointed Government ministers could use the conference season as an opportunity to reveal more about their approach to their portfolios, so we can expect particular attention focused on the new Brexit department, as well as the freshly-reformulated business and trade departments.

Prime Minister Theresa May will face intense scrutiny from those looking to establish her ultimate political instincts, with pressure growing for a resolution to the many questions raised by the shock referendum result.

She has already indicated that she does not intend to trigger Article 50 of the EU’s Lisbon Treaty this year, so those hoping for a quick and definitive answer will be disappointed.

But the tone of discussions with other European leaders will be watched carefully as the business community – and the wider waiting public – searches for clues about the path she will choose when the time eventually comes to initiate the exit process.

Read our analysis of the UK's second female Prime Minister Theresa May.

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Anna Haswell, Senior Political Analyst and Content Marketer
Anna Haswell
Senior Political Analyst and Content Marketer

As Senior Political Analyst at DeHavilland, Anna Haswell leads on financial services policy, as well as covering media issues. In her capacity as Content Marketer, she is also responsible for DeHavilland's briefings and analysis output, working across teams to ensure relevant messages reach current and prospective clients alike. She is a graduate of the University of Oxford and Goldsmiths, University of London.