U.K. Election Result Piles Up Brexit Uncertainty for Business
09 June 2017 - 7:25PM
Dow Jones News
By Nina Trentmann and Robert Wall
LONDON--Executives on both sides of the English Channel agreed
on one big takeaway from Theresa May's failure to win a majority
for her Conservative Party in the British parliament: Anything they
thought they knew about the contours of Brexit is out the
window.
"Nobody knows what this means for Brexit," said Richard Carter,
U.K. head of BASF AG, attending an annual dinner in London for the
German Chamber of Commerce Thursday evening, as exit polls
indicated a so-called hung parliament. "This will have huge
implications for Brexit."
Mrs. May's Conservatives still held on to more seats than any
other party in the general election, but the British prime
minister's failure to secure a majority--and the strong showing by
Labour and the Liberal Democrats-- scrambles British politics just
ahead of the start of negotiations over how the U.K. will exit the
European Union.
The Tories now must secure parliamentary partners to govern
effectively. Labour leader Jeremy Corbyn has called for Mrs. May's
resignation and has said he would try to form a government, though
Mrs. May will have the first crack at doing so.
For businesses confronted with Brexit, yet more uncertainty is a
big worry.
The immediate political black hole at Westminster and the
prospect of an unstable coalition or minority government in the
midterm could raise questions about everything from the timing of
the Brexit negotiations with Brussels to the possibility that the
split with the EU might not even happen.
The pound fell late Thursday after exit polls predicted the
broad outline of the election results. Analysts had braced for a
wild ride in the markets should Mrs. May fall short. Despite the
Conservatives' relatively pro-business stance compared with Labour,
Mrs. May had also committed to a clean break from EU, something
that has unnerved executives.
Ulrich Hoppe, director general of the German-British Chamber of
Industry and Commerce in the U.K. said he hoped the vote would
"lead to the country reassessing its position on Brexit." The U.K.
could become more open to compromise under a different government,
Mr. Hoppe said.
The FTSE 100 index of blue chips, rose early Friday. The index
is made up of internationally focused firms, many of which benefit
from a weaker pound.
Other executives said it was early days in assessing the
consequences of the British vote.
Fabrice Brégier, Airbus Chief Operating Officer and President
Airbus Commercial Aircraft said the company would take a "wait and
see" stance. Airbus, which makes the wings for all its planes in
the U.K. said it is focused on the long-term implications of Brexit
negotiations, not short-term currency fluctuations or even election
outcomes.
"We will have to look at the long-term consequences of Brexit.
This is what it is about," Mr. Brégier told reporters. "We want to
stay in the U.K. provided the conditions to work in and integrated
organization are met," he said.
Airbus would have to reconsider its presence in the U.K. should
a government impose tariffs on the shipments of plane parts between
the U.K. and continental Europe, or hinder foreign employees from
visiting Airbus's U.K. production sites, he said.
Still, Mr. Brégier struck an upbeat tone. "I believe there are
solutions for all the elements I listed."
One big loser on the London stock market were shares in Sky PLC,
the U.K.-based broadcaster. Rupert Murdoch's 21st Century Fox Inc.
has made a bid for the 61% of company it doesn't already own in a
roughly $14 billion deal. The transaction is contingent on U.K.
government approval. Without a clear sense of who will be in power
guiding that decision, investors sold down shares by 2.7% early
Friday. Rupert Murdoch and his family are major shareholders in Fox
and News Corp, publisher of The Wall Street Journal.
Business leaders called for quick action in forming a government
to limit uncertainty.
"With crucial Brexit negotiations coming up fast, in addition to
the significant domestic challenges we face, the lack of a
government with a majority undeniably creates uncertainty," said
Stephen Martin, director general of the Institute of Directors, a
business trade body.
Peter Toogood, chief investment officer at British investment
firm Embark Group, called the night "a setback for Brexit as we are
a long way from a strong and stable government."
Write to Nina Trentmann at Nina.Trentmann@wsj.com and Robert
Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
June 09, 2017 05:10 ET (09:10 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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