Sir Philip Green apologises to BHS Staff and Vows to ‘sort’ Pension Scheme – Corpus VEC Institutes | Virtual Ethical Careers Corpus

Sir Philip Green has apologised to the staff of collapsed retailer BHS, adding that he will “sort” the firm’s dilapidated pension scheme which has a £571 million black hole.

The Topshop billionaire is facing MPs from the Business and Pensions committees who are investigating the firm’s failure.

He said: “Nothing is more sad than how this has ended and I hope during the morning you will hear that there was no intent on my part for anything to be like this and didn’t need to be like this.

“I just want to apologise to all the BHS people who are involved in this and have been involved.”

BHS’s collapse has left a potential 11,000 jobs at risk and a £571 million pensions black hole, with the schemes of approximately 20,000 current and former workers falling into the Pension Protection Fund (PPF).

But the tycoon vowed: “We want to find a solution for the 20,000 pensioners. We still believe that money into the PPF does not resolve it. The schemes are quite complex, but from what I’ve seen I would say it’s resolvable, it’s sortable, we will sort it, we will find a solution and I want to give my assurances to the 20,0000 pensioners that I am here to sort this.”

He told the MPs that there was now “a light in the tunnel” for the scheme.

Sir Philip added that he had little to do with BHS’s pension trustees but took the blame for the current state of the scheme.

“It’s my fault,” he said.

Sir Philip has also come in for criticism for taking £400 million in dividends out of the firm during his 15-year ownership and selling it to former bankrupt Dominic Chappell for £1 in 2015.

However, Sir Philip claimed that, through his Arcadia retail empire, he had pumped £600 million into BHS after the dividend payments.

He also defended his use of the tax haven Monaco to run his business, saying: “I don’t accept that it is tax avoidance. I could have been a lot more aggressive than I probably was. Every penny our company has made in the United Kingdom has paid tax.”

In an extraordinary exchange, Sir Philip stopped mid-sentence at one point to rebuke Richard Fuller MP for “staring” at him.

He said to Mr Fuller: “Sir, do you mind not looking at me like that all the time, it’s really disturbing. You just want to stare at me, it’s uncomfortable.”

Mr Fuller replied: “I don’t wish to make you feel uncomfortable, Sir Philip.”

Striking a more convivial tone, Mr Fuller added: “I think it is another parliamentary colleague that is known for his death stare. I am sorry if I unnerved you but I learnt from my previous career in business and also in politics that if you are doing something important you should look someone straight in the eye.”

Sir Philip replied: “Now we are talking, we can look at each other.”

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Incredible & Harmful to Margins of Employers! GENDER Pay Gap: Women Earn £300,000 Less than Men Over Working Life – Corpus VEC Institutes | Virtual EthicalCareers Corpus

 

Analysis finds gap of £5,732 or 24% in average annual salaries in UK, prompting calls for more to be done to tackle problem.

 

Women are likely to earn £300,000 less than men over their working lives, according to a new analysis that has sparked fresh calls for more shared parental leave to close the UK’s stubborn gender pay gap.

Before International Women’s Day on Tuesday, figures show a gap of £5,732, or 24%, in average full-time annual salaries between women and men – more than four decades after the Equal Pay Act of 1970 was introduced.

Over a career of 52 years, that gap translates into a lifetime earnings shortfall of £298,064 for female employees, according to the analysis by the recruitment company Robert Half.

The Fawcett Society, a women’s rights organisation, said the analysis was the latest evidence of a financial price paid by many women after having children.

“The gender pay gap becomes a significant lifetime pay penalty. The gap widens for older women and becomes a significant pensions gap in retirement,” said the Fawcett Society’s chief executive Sam Smethers.

“The impact of having children means that as men’s careers take off, women’s often stagnate or decline,” she said.

“Their salaries never fully recover. We have to make it easier for men to share care, create flexibility first at work and open up more senior roles as quality part-time jobs.”

The analysis by Robert Half also highlighted faster growth for men’s full-time salaries of 1.6% compared with 1.4% for women in the year to April 2015, based on earnings figures from the Office for National Statistics (ONS).

That took the median gross pay for full-time male employees to £29,934, compared with £24,202 for women. The average for men and women combined was £27,645.

Katy Tanner, a director at Robert Half UK, said there were important lessons for employers as they increasingly report skills shortages.

“As in-demand candidates continue to be in the driver’s seat, employers are needing to offer competitive remuneration and benefits packages above industry averages,” she said.

“International Women’s Day provides a platform to highlight the importance forrewarding all employees fairly on the basis of their contribution to the organisation, rather than their gender or indeed any other point of difference.”

While this new analysis puts the gender pay gap at 24%, the ONS estimates the shortfall is 9.4%.

The two measures differ because the ONS compares median hourly earnings – rather than annual earnings – and excludes overtime. It does this because overtime can skew results, given that men work relatively more overtime than women. Using hourly earnings better accounts for the fact that men work on average more hours than women, in the ONS’s view.

The pay gap of 9.4% in April 2015, the latest figure available, marked a drop from 9.6% in 2014 and was the lowest since records began in 1997 – but the ONS noted “the gap has changed relatively little in recent years”.

Commenting on the potential £300,000 lifetime gap highlighted in Monday’s analysis, the TUC general secretary, Frances O’Grady,said: “Far more must be done to tackle the UK’s gender pay gap. We need more quality part-time jobs, better-paid fathers’ leave and more free childcare from the end of maternity leave to help mothers get back to work after having children.”

David Cameron has vowed to “end the gender pay gap in a generation”, and last year set out new rules forcing every company that employs more than 250 people to publish the pay differences. The UK has also introduced shared parental leave, but equality campaigners are concerned too few families can afford for fathers to take it.

The UK has made headway in some respects on gender equality at work, according to separate research published on Monday that shows the country rising up a “women in work” league table.

Britain climbed to 16th place from 21st the year before, in a ranking of 33 countries by the consultants PwC. Iceland, Norway and Sweden held their top three places in the table, which is based on data from 2014.

Nordics Near The Top, Again

The authors put the UK’s improvement down to a drop in female unemployment and narrowing of the gender pay gap. But it found many women in Britain were struggling to return to work after having children or career breaks and noted a relatively low share of women in full-time employment, where the UK is 30th out of 33 countries.

Despite a narrowing pay gap, the UK still lags behind on women’s earnings. PwC says the UK gender pay gap dropped from 20% to 18% in the latest index but was still higher than the average of 17% for the OECD.

PwC estimates that closing the gender pay gap would bring an £80bn boost to overall female earnings in the UK – a £5,500 average pay rise for every working woman.

The report notes a gap between Swedish and UK female employment rates.Illustration: PwC analysis, OECD

Swedish Aspirations

It also sees wider benefits to the economy from increasing the female employment rate. If the UK could match Sweden’s 60% female employment rate, it could boost GDP by 9% or £170bn, the Women in Work report said.

“It is encouraging that the UK is making progress on the employment prospects for women, but there is still a way to go before we match the Nordic countries,” said Yong Jing Teow, economist at PwC. “There are now more women in work due to the improving economy – but where we fall down is on how many of these women are in full-time work.”

Wanna Get Hired? BE IN THE KNOW of Mainstream Recruiters Subjective Thinking to Inform Your Strategy of Being Selected – Corpus VEC Institutes | Virtual Ethical Careers Corpus

 

A top Engineer recruiter at Facebook has revealed what goes on in her brain in the first 25 seconds with a new CV.

Ambra Benjamin recruits engineers for Facebook, but she has also worked in recruitment at LivingSocial, Google and Expedia.

She was asked on the question-and-answer website Quora: “What do recruiters look for in a resume at first glance?”

[Ps- Corpus VEC Institutes | EthiKALCareers Recruitment Chambers does not endorse the Recruitment Standard revealed here due to the significant degree of subjectivity. Our Approach of Excellence is Ethical, Objective, Professional and based mainly on advertisement, Person Specification, Job Description, Interviews & References. We do not toy with Candidates Efforts to make a Living through competing for Vacancies by applying non-advertised, subjective Criteria. This write-up is being shared to inform Careers Seekers about some of the trends presently in the Recruitment Sector so they can formulate their Career Progression Strategies accordingly]. 

This is Where a Recruiter’s Eye Goes First:

Most Recent Role

The first thing Ms Benjamin does is to evaluate if your recent experience is relevant to the position for which she is hiring. However she also wants to understand the reasons why you are looking for a job in the first place.

“If it’s an incoming resume, I’m wondering why the candidate is looking now. Are they laid off? Did they get fired? Have they only been in their role for a few months and they’re possibly hating it? But most importantly, is their most recent experience relevant to the position for which I’m hiring?” she said.

Company Recognition

As recruiters have generally been doing this job for a while, they notice patterns and trends among candidates from certain companies and they formulate assumptions as a result, according to Ms Benjamin.

“It’s not even that I think certain companies are better than others (although some most certainly are). It’s purely a matter of how quickly can I assign a frame of reference. This is also known as ‘credibility.’ Oh you worked at Amazon? Then you’re probably accustomed to working on projects at scale. You’re at a well-known crash-and-burn start-up? You have probably worn many hats and have been running at a sprinter’s pace,” she said.

If she doesn’t recognise a company, she will read the resume in more depth. However if it is poorly formatted or contains spelling errors, you might already have lost her interest

Experience

“Is there a career progression? Does the person have increasing levels of responsibility? Do the titles make sense? (You’re a VP of Marketing for a five-person company? Heck, I would be too.) Do the responsibilities listed therein match what I’m looking for?” – are the questions your resume will have to answer for you,  according to Ambra Benjamin.

Keyword Search

Make sure your resume contains the keywords that illustrate your experience

“Does the person have the specific experience for the role I’m hiring for? There have been times when I command +F the crap out of resumes. Especially the long ones that are hard to follow. Throughout my career supporting hiring for different profiles, I’ve done this on many occasions searching for things like Ruby on Rails, Mule, Javascript, and seriously, anything you can think of,” the recruiter said.

Gaps

Be creatively honest about your gaps, according to Ambra Benjamin they are not a problem as long as they are explained:

“Oh you took three years off to raise your children? Fine by me, and might I add: #respect. You tried your hand at starting your own company and failed miserably? Very impressive! Gap sufficiently explained. Whatever it is, just say it. It’s the absence of an explanation that makes me wonder,” she said.

Personal Online footprint

Although this is not required if you have included it in resume, the recruiter is going to look at it, according to Ambra Benjamin.

“Two out of three times, I almost always click through to a candidate’s website or Twitter account. It’s one of my favourite parts of recruiting. You never know what you’re gonna get,” she said.

General Logistics

Location and eligibility to work in the country you applying to work in are important facts to mention. According to Ambra Benjamin these facts are not going to make you fail or pass the application but they are important for her to figure out your story.

Organisation

This includes spelling, grammar, ease of use, ability to clearly present ideas.

“ If you’re in marketing and you’ve lost me in the first three bullets, I have concerns,” she said.

Things I rarely pay as much attention to:

Education

Ms Benjamin confesses that she could go a month without reviewing that section even once. Unless you are a new graduate “experience is king”.

However there are a few exceptions:

“I can think of a few exceptions where perhaps a hiring manager wanted a certain pedigree (Wharton or HBS MBA, for example), but even that’s being de-prioritized more and more. I will also add that this changes drastically by industry and company,” Ms Benjamin said.

Fancy formatting

“There are exceptions here. I say this with the caveat that I LOVE a creatively formatted resume. However, no amount of fancy formatting is going to make up for a lack of experience,” Ms Benjamin said.

Uncomfortably personal details

This might vary from country to country, but in the US employers  are trying to avoid any kind of discrimination. Things like citizenship, family status, pictures would make a recruiter uncomfortable according to Ms Benjamin.

“We just want to know about things that pertain to your work history. So please take your photo off your resume,” she said.

Cover letters

“There is a debate on this, but I’m sorry, I don’t read cover letters. I want to see the resume. Most of my recruiting colleagues agree, but I know there are still recruiters that do love and value cover letters. I’m of the mind that most companies that request cover letters only do so to weed out the people who haven’t bothered to read the directions,” Ambra Benjamin said.

Things I wish more people would  do:

Bring personality in the resume

According to Benjamin it’s important to keep the work experience details as professional as possible, but there are ways ti have with it “We recruiters are staring at these missives all day long. Throw a joke in there somewhere for goodness’ sake.”

Include URLs for online footprints

“I get it. We’ve overshared our way to a more private society, but if you’re looking to stand out, write some stuff on the Internet. Contribute to open-source repositories. Demonstrate some level of domain expertise/interest outside of your 9-5,”   Benjamin said.

List key personal projects

“What kind of stuff are you working on in your free time?” is a question Ambra Benjamin often asks to her candidates

Things I wish people would stop doing:

Using MS Word’s resume templates

“ Especially that one with the double horizontal lines above and beneath the candidate name,” Ambra Benjamin said.

Writing resumes in first person

“Exceptions for people who do it cleverly. If no one has ever told you you’re clever, then you’re probably not that clever. Don’t do it,” Ms Benjamin said.

Allowing their resume to be a ridiculous number of pages

“Unless you are a tenured college professor noble laureate with multiple published works, you do not need an 8+ page resume. That is not impressive; that is obnoxious,” Ms Benjamin said.

Mixing up first person and third person or present tense and past tense

Pick a voice, pick a tense, and then stick with it.  According to Ms Benjamin it is best to use third person and past tense.

Listing an objective at the top of the resume

Mailing, faxing, or hand-delivering paper resumes

Surprisingly, for Ms Benjamin this would be an immediate disqualification.

“Look, I get it. People are trying to stand out. But in 2016, HR professionals are swamped, anxious, and jumpy. When a random stranger shows up unannounced asking to speak to someone in HR or recruiting, we’re wondering if you have a gun and a vendetta, and we’ve probably alerted security. It’s really creepy,” she said.

Sending resumes addressed to the CEO that end up on some random recruiter’s desk unopened. “This is a gross generalization here and exceptions are made for smaller companies, but um, CEOs don’t often read resumes. We sometimes laugh at people who do this,”Ambra  Benjamin said

Exaggerating titles and responsibilities

“The truth comes out,” the recruiter said.

Britain’s Property Market is going to have a flash Crash this Summer – Corpus VEC Institutes | Virtual Ethical Careers Corpus

 

Britain’s property prices are going to fall for the first time since 2012 and London’s house prices will be affected the most, says the Royal Institution of Chartered Surveyors.Buyers are cautious due to the uncertainty surrounding the UK’s referendum on European Union membership on June 23.

RIC’s chief economist Simon Rubinsohn said in his latest report that the new stamp duty tax imposed by the government on April 1 this year also has some bearing on the lack of demand and therefore the pulldown in prices.

 

But “there is not at this point a sense that a fundamental shift is taking place in the market,” he added, which shows how property prices are likely to experience a flash crash — a short-term burst of cratering prices.

This might be a relief for people looking to buy in London as the price drop is going to be the greatest in the capital.

The average home in Greater London — which includes areas like Kingston and Croydon in the south, and Uxbridge in the north — is now worth £600,076, according to an analysis of the latest Land Registry data by property-focused asset manager London Central Portfolio.

Properties in London are now almost 60% more costly than they were prior to the 2008 financial crisis, according to the latest data from the Office for National Statistics.

It sounds like prices couldn’t possibly fall due to the great imbalance between supply and demand, but RICS demonstrated across a number of charts how the price decline is already happening.

Demand from buyers fell at the fastest rate in eight years, says RICS. As you can tell, people looking to buy a new home dropped off the radar.

London is the worst affected in terms of demand. This chart shows how, despite it now being peak season for buying and selling a property, demand is a lot lower.

At the same time, people are holding off on putting properties up for sale because of the tank in demand.

So all-in-all, the number of sales has taken a hit.

RICS

This is why property prices are anticipated to fall for the next three months, which will dent house price growth for the year.

RICS

This trend is reflected in the expected number of sales. After all, if you are selling a property, you might as well hold out until prices recover.

RICS

Overall, estate agents in RICS’ report are pessimistic and we can expect a 3- month run of property price drops will affect the market over the year.

Scandal: Sir Philip Green sold BHS due to Pension Rescue Scheme, Evidence to Parliamentary Committee indicates – Corpus VEC Institutes | Virtual Ethical Careers Corpus

 

Sir Philip Green spent months negotiating a bailout deal for BHS, according to evidence.

Sir Philip Green decided to sell BHS because of the expense of rescuing its pension fund, according to evidence released by a parliamentary inquiry on Friday.

Chris Martin, the chairman of the BHS pension fund trustees, said in notes on a meeting with Green’s advisers that the billionaire had decided to put the business on the market in early 2015 primarily because the Project Thor rescue scheme was considered too expensive “but also personal factors which have convinced him that now is the correct time to sell”.

Green sold BHS for £1 in March 2015 to Dominic Chappell, who has gone bankrupt three times. The department store collapsed into administration just 13 months later, putting 11,000 jobs at risk and leaving a £571m pension deficit.

At the time of the sale, Green had spent months negotiating the bailout deal with Martin and the other trustees, according to the evidence. He was also fending off requests from the pensions regulator for a report relating to “moral hazard”, the circumstances under which assets had been taken out of the business under Green’s stewardship.

Negotiations over Project Thor were paused in September 2014 when Green and his advisers suggested putting £50m in cash into the pension scheme and Martin said he felt it needed about £100m. Negotiations were paused just after the pensions regulator had asked Green for details of dividends paid out of BHS, management charges paid to Green’s parent company, property transactions and rental payments.

In a meeting on 2 February, just over a month before Green sold BHS to Chappell, Paul Budge, the finance director of Green’s retail business Arcadia, and Neville Kahn, a partner at Deloitte, told Martin that Green was unlikely to agree to take part in the pension regulator’s long-requested moral hazard review unless he was compelled to do so.

Green told MPs this week that Arcadia had only a handful of meetings with the former pension fund trustee chair Margaret Downes, and that the trustees had not sought a deal to fix the deficit in the scheme before 2012. A series of emails released by MPs, however, indicate that from 2008 Downes repeatedly pressed the company to increase its contributions but was told that it could not pay more than £6.5m a year.

The notes also indicate that as late as 2 February, just weeks before the sale to Chappell’s Retail Acquisitions, there were two potential bidders for BHS and Chappell was chosen as frontrunner.

They also show that Green claimed that he had personally finalised the deal with Chappell. In Martin’s notes from a call with Green on 12 March he quotes Green saying he had “put the ball in the net on his own without 27 advisers”. Green told MPs he “one million per cent” would not have dealt with Chappell if he had not been cleared by Goldman Sachs, who advised the tycoon about the sale of BHS for free.

Green said he stood by his testimony given to the parliamentary select committee in which he said that the decision to sell BHS was based on its continuing losses and the fact that Arcadia decided it could no longer afford to fund them. Arcadia issued interest-free loans of £256m to BHS, writing off £200m of loans when it sold the business.

Green also pointed to evidence given to the committee that he had been working to find a solution to the BHS pensions issue throughout. He has promised to “sort” the pension problems at the retailer. “We didn’t run away,” he told MPs.

The new documents published by MPs also provide details about how Retail Acquisitions took £17m out of BHS, with Chappell’s consortium taking a cut from property and financing deals.

Mike Ashley, the owner of Sports Direct, wrote in a letter to MPs that he thought he had agreed a rescue deal for BHS with the administrators.

He confirmed that Sports Direct was in talks with Chappell about buying BHS just days before it collapsed into administration in April, and then again with administrators after it failed.

He said there were two major obstacles to a deal with Chappell, securing consent from the pensions protection fund and pensions regulator, and Arcadia giving up its claim over BHS’s assets, which it held through a £35m loan to the department store chain.

Ashley said: “The BHS pensions scheme was discussed and it is my understanding that a call was made to the pensions protection fund, but we were unable to reach a satisfactory agreement in the time available.

“The deal did not proceed because we were placed under extreme time pressure and for the reasons set out above.”

Ashley, who also revealed that he explored buying BHS from Green in 2006 and 2007, said Sports Direct tried to revive the deal after administrators were called in.

“Our proposal would have potentially saved the vast majority of the jobs and stores at BHS and we felt that this should be taken into account when making a decision as to whether or not our bid was accepted,” he said.

He said he met administrators and Green on 27 April, when he thought a deal had been struck to save BHS.

“Our understanding when we left the meeting was that we had an agreed deal, which was to be executed on Friday 13 May 2016. Following the meeting an SPA [Sale and Purchase Agreement] was sent out by DLA [the law firm] on behalf of Duff & Phelps, which was duly returned within 48 hours. However, as you know, the deal did not happen.”

Nobel Prize-winning Economists warn of Long-term Damage after Brexit | EthiKALCareers Recruitment Chambers, Corpus VEC Institutes – Virtual Ethical Careers Corpus

 

PA LSE’s Professor Christopher Pissarides shared the Nobel Prize for Economics with Peter Diamond and Dale Mortensen.

Ten of the world’s leading economists [Are there World Leading Economics left since the GREAT Recession?] have issued a warning about the consequences of the UK leaving the EU as the City prepares for the pound to plunge and shares to fall in the event of a Brexit vote in Thursday’s referendum.

In a last-ditch attempt to persuade voters, 10 Nobel-prize winning economists, who have all been made professor laureates for research stretching from the early 1970s up until last year, have written to the Guardian to say the economic arguments are key.

“Brexit would create major uncertainty about Britain’s alternative future trading arrangements, both with the rest of Europe and with important markets like the USA, Canada and China,” they write.

“And these effects, though one-off, would persist for many years. Thus the economic arguments are clearly in favour of remaining in the EU,” they conclude.

The City is bracing for a volatile week of trading and as dealers prepare to spend the early hours of Friday morning placing orders for investors as the results start to come in from around 12.30am. Some City sources are warning that trading could “gap down” – or open sharply lower – in the event of a vote for Brexit.

Others, though, think the result could have a calming influence after a period of uncertainty. Jasper Lawler, market analyst at spread betting and financial trading site CMC Markets, said that “knowing the results is going to calm nerves”.

One of the letter’s signatories, Professor Christopher Pissarides, who is based at the London School of Economics, told the Guardian the uncertainty would reduce investment and hit job creation.

He also warned that the vote, at the start of Britain’s summer, would trigger a depreciation in the pound that would make holidays more expensive. There are suggestions sterling could slide from its current levels of around $1.42 to $1.20 and reach parity with the euro, from around €1.27 now.

In response to criticism by Vote Leave, which accuses economists of scare-mongering, Pissarides said that forecasting was difficult, and economists might disagree or get it wrong, but in this case they were overwhelmingly in favour of remaining.

He said it was absurd that out campaigners were trying to dismiss economists as irrelevant.

“Britain will not thrive outside the EU,” he added. “The biggest negative impact will be felt over the next five years, but it will persist through the lack of investment and the weaker bargaining position that Britain will have in future negotiations.”

In preparation for the vote, banks have set up war rooms across the City, and senior bankers will be on call through out the early hours of Friday. Cash machines will be fully stocked and IT upgrades put off until the outcome of the vote is known to ensure that customers will not encounter any problems accessing their money.

Firms such as Lloyds Banking Group and Royal Bank of Scotland along with US groups such as JP Morgan Chase and Citi will have teams working through the night. Brokers are also warning that higher than expected volumes might mean they are not able to complete all their trades as quickly as usual.

Stockbroker Charles Stanley has told clients: “Whatever the results, we anticipate that we may experience higher volumes and more market volatility than usual on the 23 June and in the days following the vote.”

“The immediate impact is likely to be felt most directly by those of you wishing to trade shares during such market conditions. Foreign exchange rates could also witness fluctuations and this has the potential to impact overseas trades placed during this time,” Charles Stanley said, warning that order sizes may be reduced and it could take longer to answer phones.

Some economists,argue interest rates could be cut, possibly to zero from their record low of 0.5% where they have been stuck since the financial crisis. Analysts at JP Morgan said rates could be cut by a quarter of a percentage point as soon as next month’s meeting of the rate-setting monetary policy committee. Another quarter point cut could take place in August.

“The speed and magnitude of the response will be sensitive to moves in financial markets; the MPC likely would interpret a weaker currency as reflecting weaker growth expectations provided it is accompanied by weakness in other UK asset markets,” the JP Morgan analysts said.

Many investors are expected to go into the vote without any large trading positions which could expose them to losses once the result comes in, reducing volumes and exacerbating any price movements once the outcome is known.

“An absence of market liquidity implies that we could see sharp moves in prices and heightened volatility in the hours following the announcement,” said analysts at Jefferies. They pointed to the European Central Bank’s scheduled injection of cash into the markets at 10.30am on 24 June as helping to fend off any liquidity crunch. Along with the Bank of England, the ECB will be on alert for a funding crisis facing the banking sector.

On Tuesday the Bank will conduct the second of its pre-announced funding calls for banks. Mark Carney, governor of the Bank of England, has said another will take place on 28 June. “Beyond providing liquidity, both the BoE and ECB could cut interest rates,” the Jefferies analysts said.

Sentiment towards the banking sector has already been hit hard by the Brexit vote. Analysts at Bernstein have predicted Barclays would be hardest hit, with its shares falling 40% over 18 months after a Brexit vote while the two bailed-out banks – Lloyds Banking Group and Royal Bank of Scotland – could take a hit of 35% and 25% respectively. Falls of that magnitude would impede any chances of cutting the government’s stake in both the banks.

Brexit [British EU Exit] would Adversely Impact the UK Economy More Devastatingly than its Promoters Expect | EthiKALCareers Recruitment Chambers, Corpus VEC Institutes – Virtual Ethical Careers Corpus

 

On June 23, British voters will accept or reject a proposal that Britain leave the European Union. The latest polls show the vote in favor of the British exit, or “Brexit,” narrowly ahead.

The case for getting out has largely been driven from the political right, on the grounds that dropping out of the EU would allow Britain to close off immigration and free British businesses from rules made in Brussels that protect labor and the environment. A liberated Britain, goes the argument, would have the freedom to pursue policies that would bring it more prosperity.

But after an initial shock, the prolonged economic uncertainty following a win for Brexit would hit the U.K. economy much harder than its promoters expect. It would take at least two years to negotiate the terms of the pullout with the remaining 27 countries, which are unlikely to give Britain anywhere near its current privileged access to member countries’ customers or financial markets. It will then take even longer for the U.K. to find and negotiate trade deals for other export markets at a time of spreading deflation and rising protectionism throughout the globe. Pile on the political complications of disentangling British business regulations from rules made in Brussels, and the adjustment process could take as long as a decade.

By that time, Britons may well end up with less sovereignty over their lives than they have today. Membership in the EU comes with constraints, although the British already have an arrangement that gives them special flexibility. But membership also provides the average Brit some protection against the brutalities of unregulated global markets. Divorced from the bargaining power of the EU, Britain’s social safety nets could be further sacrificed to future governments’ desperate searches for new trade and investment deals to compensate for the loss of markets on the continent.

Perhaps the most serious danger is the potential dismemberment of the U.K. itself. Scotland is very pro-EU, and the Scottish first minister has already promised that in the event of a Brexit win there will be a new referendum on independence to allow Scotland to join Europe as an independent nation.

Ironically, a rejection of the Brexit might also have some unintended consequences for the U.K. conservatives who put the referendum in play. Depending on its margin, a reaffirmation that Britain’s future is tied to Europe might ultimately move the ideology of the British electorate closer to the social democracy of its continental neighbors. Thus, for example, reinforcing the efforts by Jeremy Corbyn to return the Labour Party to its socialist roots.

Across the English Channel, a divorce from Britain might ultimately benefit the EU. In the short run, disruption and uncertainty will take its toll on both sides. But without the drag of British neoliberal ideology, the core continental governments might be freer to tackle the economic contradictions that have stunted their collective growth and led to the revival of the nationalism that the EU was designed to overcome. The European policy paralysis that followed the 2008–09 recession showed the folly of integrating markets without creating sufficient collective political authority for macroeconomic stability. The result has been a default policy of austerity. A Brexit might just be a catalyst for a new grand bargain—perhaps involving only the Eurozone—that would marry authority for common fiscal and monetary policy with a commitment to fully shared prosperity.

This is an adaptation of the original essay, which appeared in “Brexit: The Unintended Consequences,” in The International Economy, Spring 2016