Vodafone among firms that may shift head offices from post-Brexit UK

EXIT

The telecoms company, which employs nearly 110,000 people around the world and some 13,000 in the UK, said it would take “whatever decisions are appropriate” once the outcome of the negotiations was known.


In a statement, the company pointed out that its European businesses produce 55% of the group’s annual profit, whereas the UK brings in just 11%. It said the UK’s membership of the EU had been an important factor in its growth and added: “Freedom of movement of people, capital and goods are integral to the operation of any pan-European business as are single legal frameworks spanning all member states.

“Access to the emerging European digital single market should represent a significant opportunity for the UK, one of the world’s leading digital economies.”

Vodafone added: “It remains unclear at this point how many of those positive attributes will remain in place once the process of the UK’s exit from the European Union has been completed. It is therefore not yet possible to draw any firm conclusions regarding the long-term location for the headquarters of the group.”

The company, run by Italian Vittorio Colao, said that while the outcome of the exit negotiations remained uncertain it intended to beef up its “regulatory and public policy activities in Brussels to ensure the Group’s substantial businesses within the European Union continue to be represented appropriately”.

It is understood that if any move was made it would affect the group’s offices in Paddington, west London, rather than its UK hub in Newbury.
The company, founded in the UK in the 1980s, is now the seventh biggest company listed on the FTSE-100, a sprawling multi-national with a stock market value of more than £55bn.

Vodafone’s warning came as the CBI business lobby group warned that firms are already putting investment plans on ice as a result of the uncertainty caused by the Brexit vote.

As a wide range of businesses – including German company Siemens and Sir Richard Branson’s Virgin – warned about the implications for the UK, the CBI director-general, Carolyn Fairbairn, called on the government to act quickly.

Speaking after a summit of 27 business and industry representatives hosted by the business minister, Sajid Javid, Fairbairn said: “We’re a long way off having a plan and leadership and … that is what businesses need.

““We urgently need leadership, particularly given the political vacuum.”

She also demanded some reassurance for EU workers in the UK. “We must give urgent long-term reassurance to the thousands of EU migrants already working in the UK that they can stay here,” she added.

Javid hinted that UK negotiators might seek a deal with Brussels under which the UK would have access to the single market without agreeing to freedom of movement for EU citizens who want to work in Britain.

The business secretary said maintaining access to the single market – allowing UK businesses trading with the EU to avoid punitive tariffs – would be his “number one priority” but added that “access can come in many forms”.

Non-EU countries such as Norway and Iceland have access to the single market, but only on the condition that they allow freedom of movement for EU workers.

Despite EU leaders warning that Britain cannot expect special treatment, Javid said a deal that allowed Britain to opt out of freedom of movement was not out of the question.

“You refer to how other countries have secured access but I don’t think … it has to work like that for the UK,” he said.

Javid claimed some major overseas investors were unconcerned by the political uncertainty. He pointed to the Chinese telecoms firm Huawei, which has promised the government that its planned £1.3bn investment in the UK will go ahead.

Speaking in China, Guo Guangchang, the head of Fosun Group, China’s biggest private conglomerate, told Reuters he was still on the lookout for deals in the UK.

But other business were more cautious. Siemens, which makes wind turbines in Hull, admitted it was putting new wind power investment plans on hold, while Sir Martin Sorrell, chief executive of advertising company WPP, told a conference organised by the Times: “This is going to be very painful, but the turmoil does bring opportunities.”

The most outspoken critic was Branson, who warned Chinese investors were already pulling back from the UK.

“The last two days has been absolute pandemonium worldwide in the markets, the pound crashing, the stock markets crashing, and we are heading rapidly towards a recession again. It’s just too sad; so, so sad,” said Branson, who lives in the British Virgin Islands and did not have a referendum vote in the UK, but owns businesses spanning financial services and gyms, employing 50,000 people in the UK.

Banks, whose shares have been hard hit by the market rout, also responded to the turmoil. The chief executives of the bailed-out banks Royal Bank of Scotland and Lloyds Banking Group wrote to their employeesto spell out risks and offer reassurance about the future.

Ross McEwan, chief executive of RBS, told the bank’s 90,000 staff: “Our ‘day one’ plan worked, but of course the result of the vote carries with it a range of unknowns about the short, medium and long-term prospects for the UK and its economy. Added to this we now have a period of political uncertainty.”

His counterpart at Lloyds, António Horta-Osório, said the bank’s strategy – to be a UK-focused, low-risk retail and commercial bank remained unchanged.

“I know that the referendum result has had an impact on the share price of many companies, including ours, but I believe the fundamentals of the group are strong,” he said. To reinforce his view he bought 100,000 Lloyds’ shares for £54,000.

It was reported that Visa was also considering axing hundreds of UK jobs as there was a fresh focus on how US banks operating in Britain would react. The co-head of European operations of Goldman Sachs, Richard Gnodde, appeared to signal jobs would move after telling the Times CEO summit that “every outcome is possible”.

Other US banks, notably JP Morgan, have warned about job losses and the Fitch ratings agency suggested US banks could relocate jobs to Ireland and the Netherlands.

Robin Johnson, head of the cross-border mergers and acquisitions team at Eversheds law firm, said Brexit would accelerate decisions to move jobs. “Already we’re hearing noises about possible offshoring and even permanent relocation”.

Legal & General was among companies trying to settle nerves. The financial services firm said it had planned for a 50-50 probability of a vote for the UK to leave the EU, and had removed risks from its portfolios.

Engine maker Rolls-Royce, which wrote to staff in the run-up to the referendum to say it wanted to remain in the union, said it was committed to the UK, where it employs 23,000 people.

Powered by Guardian.co.ukThis article was written by Rob Davies and Jill Treanor, for The Guardian on Wednesday 29th June 2016 00.12 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

JefferiesAnd the Best Place to Work in the global financial markets 2016 is...

Register for Financial Markets News Alerts