Britain’s former Prime Minister David Cameron wasn’t the only one surprised by the UK’s decision to exit from the European Union (EU). CEOs here were equally taken aback by the results of Brexit last Friday (24 Jun).
“I didn’t think Britain would actually go that far,” says Martin Geh, managing director at Google Singapore. Selena Ling, head of treasury research and strategy at OCBC bank agrees: “Brexit came as a surprise to the financial markets, as seen by the volatility last Friday and today.”
However, Peter Allen, CEO of accounting firm Grant Thornton Singapore, predicted this outcome. Says the British-born: “My forecast was for a Leave vote at 54 per cent, so [the results] came in a little under [my expectations].”
Markets have been volatile since Brexit, starting with the sterling taking a plunge in the wee hours of Friday from $1.50 against the US dollar to $1.33. Nearly $2 trillion was wiped off global markets. Then, Cameron, who campaigned hard against Brexit, released an official statement for his resignation.
Here, The Peak gets three CEOs to weigh in on how Brexit will impact Singapore’s economy – both short and long term – as well as their views on a possible rise in the anti-establishment movement.
PA: Peter Allen, CEO, Grant Thornton
FS: Dr. Frederick Shen, head of business management, global treasury, OCBC
MG: Martin Geh, managing director at Google Singapore
How do you perceive the impact of Brexit on our economy – both long and short term?
PA: “In the short run, I would expect some limited negative impact given that quite a few Singaporeans hold sterling assets and these would have been marked down. Long term, assuming the British government can do a decent deal with the EU and there is a bilateral UK/Singapore trade treaty, I would expect a mildly positive impact. The British government is the most pro-free trade in living memory and I would expect Singapore and the region to be exactly the sort of place with which they will wish to do a deal as a matter of priority.”
FS: “We can already see the financial impact. Stocks are down. Short term, those who gain will be those who benefit from a weaker sterling, while those with assets or business in the UK may suffer in the interim. Long-term impact on our economy depends on how messy the separation will be as the trade pacts will need to be renegotiated individually between EU and UK.”
MG: “Unclear for now, but more start-ups may choose to either raise seed funds or place operations in Singapore now rather than London. Uncertainty is never good for tech companies. There’s also the possibility of a talent drain from Britain to other countries, and Singapore may gain from it.”
With Brexit and the rise of Trump, is this a greater sign that the anti-establishment movement is gathering steam? What are the possible repercussions?
PA: “Personally I don’t read the Brexit vote as principally a post-2008 antiestablishment event. Admittedly, the establishment gave clear advice and was broadly ignored, including a lot of the Remain vote who mostly voted for much more emotionally positive pro-EU reasons than the establishment’s gloomy economic position. But you need to remember that the EU has been a byword for undemocratic incompetence among large swathes of the UK population for decades and my guess is that a referendum held on the subject at any point since the early 1990s would have gotten pretty much the same result.”
MG: “I think our longstanding notions of how the world works are being thrown out the window one at a time. I am positively confidently and 100 per cent certain that I haven’t a clue what will happen to established systems of government and commerce. One thing for sure, and that is every government, no matter how incumbent, must be reevaluating their positions and plans. Strap yourself in for a new ride.”
FS: “While Trump appears anti establishment it is not clear he resonates with the American public at large. This is a wait-and-see game. He is certainly a refreshing face on the political scene. Clinton is a known quantity as she was State Secretary before but her handling of the home server email issue may be her weak point. Brexit, I do not see as anti establishment. Rather, it might be more of the costs versus benefits of being in the EU. Look at Switzerland and the Scandinavian countries. They are not EU and yet have not suffered as a result of not being in the union and that is what UK sees. UK already controls its own currency so really the benefits to the ordinary folks were not clear. The voting showed that as London voted in while the outer folks like Wales voted out. The industrial zones were close with such as Sunderland or Newcastle. London being a key financial centre next to New York obviously benefited from being in the EU with Schengen.”