From London to Paris to Tokyo, business leaders reacted with dismay to the U.K.’s vote to leave the European Union, with some of them warning the decision would slow economic activity and cut investment in the country. As the pound and stocks plunged Friday, companies in industries like travel, advertising and automobiles, which are heavily exposed to swings in currencies, said they would reassess their strategies. International Consolidated Airlines Group SA, parent of British Airways, was among the first to quantify the vote’s impact, warning that the decision will reduce profit growth.
For U.K. voters, Brexit may reflect local concerns, but the responses from corporate leaders underline the global impact of the first departure from the 28-nation bloc. The “leave” vote could slow everything from car sales to ad spending to Mediterranean beach tourism, prompting companies to divert investments and review employment levels in the U.K. and beyond. Prior to the vote, most corporate leaders who had spoken out on the issue had expressed support for remaining in the EU.
"This is a lose-lose result for both -- Britain and Europe,” said Chief Executive Officer Thomas Enders of Airbus Group SE, which makes wings for its aircraft in the U.K. “We will review our U.K. investment strategy, like everybody else will."
The result sent stock prices plunging across Europe, with French automaker Renault SA losing as much as 20 percent and Spanish phone company Telefonica SA, which has been trying to sell its O2 wireless unit in the U.K., dropping as much as 19 percent. Telefonica is considering delaying plans for initial public offerings of two units, including U.K. mobile operator O2, according to people with knowledge of the situation.
Among the hardest hit in the U.K. were retail chains such as electronics merchant Dixons Carphone Plc, book retailer WH Smith Plc, apparel seller Next Plc and Associated British Foods Plc, owner of budget fashion retailer Primark. Shares of all of those companies fell more than 30 percent before paring losses.
Advertising spending, which reacts quickly to economic swings, could experience a two- or three-year “rollercoaster” ride in Europe, said CEO Maurice Levy of Paris-based marketing giant Publicis Groupe SA. That could cause the company to rethink its U.K. investment plans, he added. “We could have set up some centers in the U.K.," he said. "Now it’s out of the question. The advertising market will surely suffer.”
Swiss watch brand H. Moser & Cie., which has three stores in the U.K. and gets about 5 percent of its revenue from the country, is considering reducing spending, CEO Edouard Meylan said. “We don’t want to panic and we think it will stabilize, but should the pound keep falling or stay like this, we might cut advertising in the U.K.,” he said.
The richest people in the U.K. lost $5.5 billion Friday after the country stunned global markets by voting to leave the European Union. The drop for the 15 wealthiest Britons tracked by the Bloomberg Billionaires Index came as European markets headed for the biggest fall since 2008 and the sterling plunged to its lowest level in more than 30 years. The withdrawal has already hit Topshop billionaire Philip Green's fortune quite hard. According to Bloomberg, Green's net worth plunged by $900 million this morning, a 20% fall.
Earlier this week, Burberry chief executive Christopher Bailey and chairman sir John Peace told staff that a Leave vote would trigger “unnecessary economic consequences.” Bailey and Peace cited the importance of access to European markets both for import and export, the ability to recruit from across the continent and the more fundamental security of the UK inside of the EU.
“We face a period of ambiguity that could see companies and customers alike delaying significant decisions relating to investment, employment and travel. As a responsible business, we are of course scenario planning to prepare and protect ourselves in the event of a leave vote,” they said
“It is not for the company to suggest how people should vote, but we felt it was important to outline the reasons why we firmly believe that Britain and Burberry would be stronger and more prosperous remaining in the European Union.”