Now that PM May’s deal has failed to pass, the UK is left scrambling for alternatives whilst time for the scheduled exit is running out. Five main options exist: leave with no deal, referendum, renegotiate, a general election, and (albeit unlikely) another no-confidence vote. The uncertainty of the future outcomes manifests itself in markets in varying ways. 

PWC projects a modest economic growth level in the UK of around 1.3%, which is reflective of the “ongoing economic and political uncertainty relating to the outcome of the Brexit negotiations”, as these drag on business investments. Even given the most extreme scenario (no-deal), no economist predicts a British recession. The most immediate and continuing effect of the 2016 referendum was the extreme volatility of the pound sterling against both the US dollar and the euro. Regardless of the type of outcome, the pound will undoubtedly experience extreme fluctuation, along with other financial instruments susceptible to mass psychology. In the case of a smooth Brexit (a Brexit in which the United Kingdom's relationship with the European Union is a close as possible to what it was before Brexit), the consensus is that the Bank of England will raise rates to 1% by mid-2019. 

When it comes to businesses’ ability to prepare for the future, there is a discrepancy between large and small companies. Large companies have had the necessary resources available to secure contingency plans for various outcomes. A no-deal Brexit would predominantly cause distress for smaller companies, which will be at the mercy of the macro environment and have, in most cases, been unable to prepare necessary contingency measures. 

Financial services are preparing significantly for a no-deal Brexit. Financial Times estimated that already 800 billion British Pounds in assets has been shifted out of the UK into the EU. This shift will be vital if financial firms hope to continue serving European customers. The previously mentioned figure is considered highly conservative, given that currently both the UK’s banking and asset management sector hold around 8 trillion British Pounds under management. Though there has been a lot of talk regarding the future of London’s financial superiority, even a no-deal Brexit would not see an immediate dramatic shift. “if the money stays in London, so will the banks” -John Murray Brown

One component of the macro environment that would be put at risk because of a no-deal Brexit would be various international supply chains. Manufacturing and other industries that require high levels of inflexible capital investments would have to implement large-scale contingency plans to get around the breaks that would occur within their current supply chain. These could easily result in an economic blow for the UK in terms of business investments and employment. Toyota as an example publicly stated that it may have to close UK factories given a no-deal scenario. 

Additionally, Airbus, UK’s biggest employer, has been equally vocal in their opposition to a no-deal. Tom Enders, Airbus’s CEO, stated that the uncertainty over the terms of Britain’s exit “is really unbearable”. Furthermore, he continued a sentiment shared by most of the business community in that the proposal brought forth by Theresa May is “just a lot less bad than a no-deal”. Last June, Airbus stated that if indeed the UK were to leave the EU without defined terms on a future trading relationship, the company could lose up to €1 billion a week in sales.