Many councils, hospitals and schools are already on the brink – they simply won’t withstand further shocks and uncertainty – so measures will need to be in place quickly to ensure the protection of public services.
Regardless of which way you voted yesterday, the die has been cast and now it’s our job to come together to ensure exit from the EU flows as smoothly as possible.
Although an unprecedented and seismic decision, it is as important for finance professionals, as it is for the government, to avoid knee-jerk reactions that may do more harm than good.
We all have a massive task ahead of us as we work to disentangle ourselves from a union that has shaped every aspect of British life for more than 40 years.
The immediate aftermath of the referendum is going to be one of significant confusion and high-levels of uncertainty as politicians seek to grapple with the reality they now face. However, it is in everyone’s interest that the pathway to a clear and achievable transition is agreed promptly. The government must also act quickly to reassure those communities currently relying on European structural and investment funding in particular that this funding will not disappear when the UK takes control of the budget.
It is expected that the transition will take place over a two-year period, allowing at least some time to plan for the major changes that will follow. It is crucial that the government carry out detailed analysis of public finances before making any decisions.
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Few of us will be sorry that the campaigning has now come to an end. The barrage of absurd and misleading claims to which we have been subjected over the last few months has done little to build trust on either side of the argument. But certain assertions, perhaps made in the heat of fierce campaigning, will need to be followed up.
The chancellor had promised an emergency budget with tax rises and further spending cuts to plug the £30bn gap predicted by the Institute for Fiscal Studies. Given David Cameron’s resignation this morning and the turmoil that goes with a change of party leadership, it’s questionable whether this budget will now take place. Nevertheless, a new government will almost certainly need to get a new fiscal mandate and take the corrective action which will be necessary in the wake of the shock we are witnessing today.
Following Nigel Farage’s astonishing admission this morning that the NHS funding claims from the UK’s £350m net contribution were ‘a mistake’, the proposals put forward for increased funding for any other public services look shaky at best. Amidst this inevitable economic turmoil, maintaining sustainable funding for already cash strapped public services in an ever tightening fiscal noose will be no easy task. It is important we maintain our focus on the medium term.
The Chartered Institute of Public Finance & Accountancy and its members have a task ahead, there’s no doubting that, but by combining our knowledge, expertise and professional discipline, we can continue to shape financially sustainable public services; and with a little bit of grit and ingenuity, we will steer a steady ship through these stormy waters.
Rob Whiteman, chief executive, Chartered Institute of Public Finance & Accountancy