Vodafone has warned that it could move its head office from the UK if negotiations for a post-Brexit Britain do not result in freedom of movement for people, capital and goods. The telecoms company, which employs nearly 110,000 people around the world and about 13,000 in the UK, said it would take “whatever decisions are appropriate” once the outcome of the talks is known.
In a statement, the company pointed out that its European businesses produce 55% of the group’s annual profit, the UK 11%. Britain’s membership of the EU had been an important factor in Vodafone’s growth, it said. “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,” the company said. “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.”
Vodafone, which is led by the Italian Vittorio Colao, said that while the outcome of the Brexit negotiations remained uncertain, the company intended to beef up its “regulatory and public policy activities in Brussels to ensure [that] the group’s substantial businesses within the European Union continue to be represented appropriately”.
It is understood that if any move were made, it would affect the group’s offices in Paddington, central London, rather than Vodafone’s UK hub in Newbury, Berkshire. Vodafone is now the seventh-biggest company on the FTSE 100, with a stock market value of more than £55bn.
Its warning came as the CBI business lobby group said companies are putting investment plans on ice as a result of the EU referendum result uncertainty.
As a wide range of businesses, including German company Siemens and Virgin, warned of the implications for the UK, the CBI director general, Carolyn Fairbairn, called on the UK government to act quickly. Speaking after a summit of 27 business and industry representatives hosted by the business minister, Sajid Javid, she said: “We’re a long way off having a plan and leadership and … that is what businesses need.
She also demanded 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,” Fairbairn said.
Javid hinted that UK negotiators may 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.
Maintaining access to the single market, allowing UK businesses trading with the EU to avoid punitive tariffs, would be a “number one priority”, said Javid, adding 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 permitting 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 that some major overseas investors were unconcerned by the political uncertainty. He pointed to the Chinese telecoms company Huawei, which has promised the government that its planned £1.3bn investment in the UK will go ahead.
Guo Guangchang, the chairman of Fosun Group, China’s biggest private conglomerate, told Reuters that 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 that it was putting wind power investment plans on hold. Sir Martin Sorrell, the 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 that 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 that employ 50,000 people in the UK.
Banks, whose shares have been badly affected by the market rout, also responded to the turmoil. The chief executives of Royal Bank of Scotland and Lloyds Banking Group wrote to their employeesto spell out risks and offer reassurance about the future.
Ross McEwan, the chief executive of RBS, told its 90,000 employees: “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 cutting 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 at Goldman Sachs, Richard Gnodde, appeared to signal that 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, the 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 company 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 EU, said it was committed to the UK, where the company employs 23,000 people.