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Multinationals warn of UK job cuts and lower profits after Brexit vote Multinationals warn of job cuts and lower profits after Brexit vote
(about 4 hours later)
Some of the world’s biggest companies have warned they could cut jobs in Britain and that their profits would be lower than expected after the country voted to leave the European Union. Thousands of jobs are at risk in the UK after some of the world’s largest companies warned they could relocate their British-based operations on the back of the referendum result.
The investment bank JP Morgan warned staff that it might have to relocate jobs, while the owner of British Airways said profits for the year would now grow less than expected because of the volatility in the market. A South African company bidding for the discount retailer Poundland also warned it could pull out of a deal. Investment bank JP Morgan, airplane maker Airbus and car manufacturers Toyota and Ford all warned they will review their investments in the UK after the country voted to leave the European Union.
Business leaders called for “immediate and unambiguous” action to shore up the economy and to guarantee that EU citizens have the right to remain in the UK. They welcomed David Cameron and Mark Carney, the governor of the Bank of England, laying out a plan for the next three months. The fallout from the vote also forced companies into issuing profit warnings. The owner of British Airways said its profits for the year will now grow less than expected because of the volatility in the market, while Mike Ashley’s Sports Direct warned that the collapse in the value of the pound against the dollar would lead to an increase in the cost of importing goods. A South African company bidding for the discount retailer Poundland also warned it could now pull out of a deal.
Related: Bank of England promises £250bn to calm markets after Brexit vote - live updates The chaos in the market led to other companies emailing staff or issuing public statements to reassure their workforce and shareholders that their financial position was secure.
Simon Walker, director-general of the Institute of Directors, said: “Business will welcome a pause so that the heat can be taken out of the situation before Article 50 [of the treaty on European Union] is triggered and the formal process for leaving the EU begins. Stock markets around the world fell sharply after the referendum result was confirmed.The FTSE 100 was down 8% at one stage before ending the day down by 3% , with banks and housebuilders suffering the biggest falls.
“In the short-term, David Cameron has reassured the country that nothing will change for firms employing EU citizens, or for businesses’ trading relationships. For those wishing to replace him, we urge top priority is placed on negotiating a new arrangement that gives UK companies access to the single market, and the much-needed skills of EU workers.” Jamie Dimon, chief executive of US bank JP Morgan, warned that between 1,000 to 4,000 UK jobs at the bank could move overseas. Fellow US bank Morgan Stanley is also looking at moving jobs to Europe.
Stock markets around the world fell sharply after the vreferendum result, with the FTSE 100 down 8% at one stage, including heavy falls for banks and housebuilders. JP Morgan said in an email to staff that changes might be needed in in the location of some roles and to its “European legal entity structure”. However, the bank, which employs 16,000 people in the UK, said it will maintain a large presence in London, Bournemouth and Scotland.
JP Morgan said in an email to staff that changes might be needed in in the location of some roles and to its “European legal entity structure”. The bank, which employs 16,000 in the UK, said it will maintain a large presence in London, Bournemouth, and Scotland. Dimon said in the email: “While these changes are not certain, we have to be prepared to comply with new laws as we serve our clients around the world. We will always do our best to take care of our people and do the right thing during times of change.
Jamie Dimon, its chief executive, said: “While these changes are not certain, we have to be prepared to comply with new laws as we serve our clients around the world. We will always do our best to take care of our people and do the right thing during times of change.
“We are hopeful that policymakers will recognise the immense value created through a continued open economic engagement between the UK and EU members. As negotiations offer more clarity over the coming months, we will communicate with you and with our clients regarding any relevant changes.”“We are hopeful that policymakers will recognise the immense value created through a continued open economic engagement between the UK and EU members. As negotiations offer more clarity over the coming months, we will communicate with you and with our clients regarding any relevant changes.”
Analysts warned there were likely to be “serious implications” for the City of London from the vote. Analysts warned there were likely to be serious implications for the City of London from the vote. The City employs more than 360,000 in financial services.
Nick Elwell-Sutton, partner at law firm Clyde & Co, said: “At a more fundamental level, unless the financial services passporting rules are resolved in the UK’s favour, then many large financial services businesses are likely to relocate to within the EU meaning large scale redundancies would be highly probable.” Nick Elwell-Sutton, partner at law firm Clyde & Co, said: “At a more fundamental level, unless the financial services passporting rules are resolved in the UK’s favour, then many large financial services businesses are likely to relocate to within the EU, meaning large scale redundancies would be highly probable.”
BASF also warned that the vote createduncertainty. Some of the biggest manufacturers in the UK also warned they could cut jobs.
Kurt Bock, chief executive of the chemicals group, said: “The United Kingdom is and will remain an important market for BASF. It has always been our strong conviction that the UK is better off within the EU, we therefore very much regret that Great Britain and Northern Ireland want to leave the European Union. Although we respect the decision of the British people, this outcome of the referendum will cause considerable uncertainty for markets, companies and households.” Ford, which employs 14,000 in Britain, warned it “will take whatever action is needed” to remain competitive.
The result could also have serious implications for the steel industry. Tata Steel is trying to negotiate a deal to keep its UK business, which employs 11,000 people, but the outcome of the referendum was key to its final decision. Related: Bank of England promises £250bn to calm markets after Brexit vote - live updates
Gareth Stace, director of UK Steel, said: “The decision to leave the European Union will send shockwaves across the UK’s steel industry. Our sector is well versed in having challenges thrust upon it, but it’s clear that this is like no other.” The carmaker said: “While Ford will take whatever action is needed to ensure that our European business remains competitive and keeps to the path toward sustainable profitability, we have made no changes to our current investment plans and will not do so unless there is clear evidence that action is needed.”
Airbus, the maker of the A380 superjumbo, also expressed disappointment at the result. The company makes wings for its aircraft in Wales and employs 15,000 people in the UK.
“This is a lose-lose ‎result for both, Britain and Europe,” Tom Enders, its chief executive, said. “However, the world will not stand still, nor will Europe. I hope the divorce will proceed with a view on minimising economic damage to all impacted by the Brexit.
“Britain will suffer, but I’m sure it will ‎focus even more now on the competitiveness of its economy vis-a-vis the EU and the world at large. But of course we will review our UK investment strategy, like everybody else will.”
Japan’s Toyota, which manufactures cars in Derby, said it would “closely monitor and analyse the impact on our business operations in the UK”.
The result could have serious implications for the steel industry. Tata Steel is trying to negotiate a deal to keep its UK business, which employs 11,000 people, but the outcome of the referendum was key to its final decision.
Gareth Stace, director of industry trade body UK Steel, said: “The decision to leave the European Union will send shockwaves across the UK’s steel industry. Our sector is well versed in having challenges thrust upon it, but it’s clear that this is like no other.”
However, two key British manufacturers, Rolls-Royce and Jaguar Land Rover, pledged to stand by their workforces.
“For Jaguar Land Rover, today is just business as usual,” said a JLR spokesperson. “We are a British business with a strong manufacturing base in this country, we call Britain home and we remain committed to all our manufacturing sites and investment decisions.
“We respect the decision of the British people and in common with all other businesses, Jaguar Land Rover will analyse the issues arising from it. As of today, nothing has changed for us or the rest of the British automotive industry.”
A string of UK companies, including Aviva and easyJet, issued stock market statements that insisted that there would not be a material impact to their finances as a result of the vote.A string of UK companies, including Aviva and easyJet, issued stock market statements that insisted that there would not be a material impact to their finances as a result of the vote.
But International Airlines Group, owner of British Airways, said weaker than expected trading in the run-up to the referendum and the volatility in the market meant profits for the year might not grow as much as hoped.But International Airlines Group, owner of British Airways, said weaker than expected trading in the run-up to the referendum and the volatility in the market meant profits for the year might not grow as much as hoped.
“International Airlines Group believes that the vote to leave the European Union will not have a long term material impact on its business,” it said. “In the short term, however, in the run up to the UK referendum during June, IAG experienced a weaker than expected trading environment.”“International Airlines Group believes that the vote to leave the European Union will not have a long term material impact on its business,” it said. “In the short term, however, in the run up to the UK referendum during June, IAG experienced a weaker than expected trading environment.”
Others, however, pledged it was business as usual for their companies. Other chief executives sought to reassure staff about the impact of Britain leaving the EU.
Sebastian James, chief executive of Dixons Carphone and a friend of David Cameron’s, tweeted:Sebastian James, chief executive of Dixons Carphone and a friend of David Cameron’s, tweeted:
Feels strange and unsettling following the vote but we are the same, our company is the same, and our job is the same. Making people happyFeels strange and unsettling following the vote but we are the same, our company is the same, and our job is the same. Making people happy
BMW, another major employer in the UK, said: “While it is clear there will now be a period of uncertainty, there will be no immediate change to our operations in the UK.
“Today, we know that many of the relevant conditions for supplying the European market will have to be renegotiated, but of course we cannot say what this mean for our UK operations until those future regulatory and legislative arrangements are agreed. We will not speculate about the outcome of these negotiations nor about any possible effects that might have on our production operations in the UK.”
Lloyd Blankfein, chairman and chief executive of Goldman Sachs, told staff the US bank had prepared for a leave vote.Lloyd Blankfein, chairman and chief executive of Goldman Sachs, told staff the US bank had prepared for a leave vote.
“We respect the decision of the British electorate and have been focused on planning for either referendum outcome for many month,” he said. “Goldman Sachs has a long history of adapting to change, and we will work with relevant authorities as the terms of the exit become clear. Our primary focus, as always, remains serving our clients’ needs.”“We respect the decision of the British electorate and have been focused on planning for either referendum outcome for many month,” he said. “Goldman Sachs has a long history of adapting to change, and we will work with relevant authorities as the terms of the exit become clear. Our primary focus, as always, remains serving our clients’ needs.”
Jes Staley, chief executive of Barclays, said: “This is a significant decision and there will be many questions asked in the coming days and weeks about what happens next. The answers are complex but our position is not: we will not break our stride in delivering the Barclays of the future.” Jes Staley, chief executive of Barclays, also emailed workers. He said: “This is a significant decision and there will be many questions asked in the coming days and weeks about what happens next. The answers are complex but our position is not: we will not break our stride in delivering the Barclays of the future.”
Business leaders overwhelmingly called for Britain to remain in the EU, with more than 1,000 chief executives signing a letter backing a remain vote just days before the referendum.Business leaders overwhelmingly called for Britain to remain in the EU, with more than 1,000 chief executives signing a letter backing a remain vote just days before the referendum.
The British Chambers of Commerce said the government’s response to the vote would be vital for businesses.The British Chambers of Commerce said the government’s response to the vote would be vital for businesses.
Adam Marshall, its acting director general, said: “The health of the economy must be the number one priority – not the Westminster political postmortem. Adam Marshall, its acting director-general, said: “The health of the economy must be the number one priority – not the Westminster political postmortem.
“Business will also want to see a detailed plan to support the economy during the coming transition period – as confidence, investment, hiring and growth would all be deeply affected by a prolonged period of uncertainty. If ever there were a time to ditch the straitjacket of fiscal rules for investment in a better business infrastructure, this is it.”“Business will also want to see a detailed plan to support the economy during the coming transition period – as confidence, investment, hiring and growth would all be deeply affected by a prolonged period of uncertainty. If ever there were a time to ditch the straitjacket of fiscal rules for investment in a better business infrastructure, this is it.”