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Brexit: The Aftermath

REPORT

UK Project Management Round Up

By Miles Shepherd

Executive Advisor & International Correspondent

Salisbury, England, UK


Brexit: Part 1 – 26 June 2016

INTRODUCTION

The surprise of the month has not been “Brexit” but a candid report on the British Army, the challenges it faces and the way it is meeting them.  But there can be no doubt that the main story has to be Brexit, the short term implications for the country and the longer term impact on UK projects.

BREXIT IN THE SHORT TERM

When the country went to bed on Thursday night, most people, including some of the main “Leave” camp were forecasting a narrow win for the “remain” camp so there was some surprise when early the next morning, it emerged that the referendum had resulted in a 52% vote to Leave the European Union (EU) and 48% in favour.  The turnout was about 72% of the voting population – some 30 million voters had spoken.

The immediate impact was a drop of nearly 400 points (~4.5%) on the Stock Exchange on opening but this was reduced to a total day’s loss of about 175 point (~2.75%).  Most of the FTSE companies were down on the day but in the main posted only small losses.  However, banks and house builders took massive hits with construction down an average of 25% – total losses on the day across all listed companies were about £150 billion.

The political impact has been significant: as might have been expected, the Prime Minister, David Cameron, has declared that he will step down once a new Conservative leader is elected, probably in the early autumn.  Perhaps more surprisingly, the main opposition party has been heavily impacted with a call on Black Friday for a vote of no confidence.  In itself, this is not particularly significant but on Sunday, after the Opposition Leader, Jeremy Corbyn, sacked a member of his shadow cabinet for disloyalty, a further 7 members of his leadership team resigned with more expected to leave shortly.

Perhaps the most important aspect is that the short term is actually not all that short.  Very little will happen for at least 2 years once the Article 50 declaration has been made.  Article 50 makes provision for members to leave the EU and sets a 2 year project in place – a point we will return to shortly.

STAKEHOLDER IMPACT

A stakeholder analysis of the results would show that the external impact of BREXIT introduces as much uncertainty to the EU as it does to UK.  Several other countries in the EU are said to be preparing demands on their governments to hold similar referendums with dissatisfaction in Scandinavia prominent while France and Netherlands having vociferous calls to leave.  Remaining EU members are reputed to be shocked by the outcome and concerned about the impact on their own situations.  They cannot say they were not warned – Mr Cameron explained the likely issues to result from the very limited changes offered by fellow members in response to his negotiations over the last 18 months.

Most of the stakeholders are British based.  The major issue emerging is the impact of the vote on the stability of the United Kingdom.  The Scots have already raised the spectre of another referendum over leaving the UK while Northern Ireland are now claiming that they should have a referendum on unification with the Republic of Ireland.  Somewhat further afield, Spain are claiming joint sovereignty over Gibraltar.  And just to keep the referendum pot boiling, there is an on-line petition with a reputed 3 million signatories asking for a parliamentary debate on declaring the first vote invalid as the margin was small and the vote less than 75% of eligible voters!  Whether this last gasp attempt to move the goal posts is successful will depend on the results of a challenge on the validity of the electronic ‘signatures’.

SHORT TERM IMPACT ON PROJECTS

The major point to emerge is the drop in the value of the £ which will make it much cheaper to buy British goods and services and to invest in UK projects.  So we can expect an influx of foreign money into the country.  Set against that will be the impact on business cases – if the Sterling returns are worth less, some overseas projects may not be able to justify the outlay.  For instance, the cost of developing Hinkley C nuclear reactor should be less but the long term return on investment is also likely to be less – as if the financial analysts don’t have enough to worry about!  The UK press reckon this is the death knell for the Hinkley project.

More…

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About the Author

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MILES SHEPHERD

Salisbury, UK

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Miles Shepherd
is an executive editorial advisor and international correspondent for PM World in the United Kingdom. He is also managing director for MS Projects Ltd, a consulting company supporting various UK and overseas Government agencies, nuclear industry organisations and other businesses.  Miles has over 30 years’ experience on a variety of projects in UK, Eastern Europe and Russia.  His PM experience includes defence, major IT projects, decommissioning of nuclear reactors, nuclear security, rail and business projects for the UK Government and EU.   Past Chair and Fellow of the Association for Project Management (APM), Miles is also past president and chair of the International Project Management Association (IPMA).  He is currently Director of PMI’s Global Accreditation Centre and the Chair of the ISO committee developing new international standards for Project Management and for Program/Portfolio Management.  He was involved in setting up APM’s team developing guidelines for project management oversight and governance.  Miles is based in Salisbury, England and can be contacted at [email protected].

To view other works by Miles Shepherd, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/miles-shepherd/.