U.K. Election Result Piles Up Brexit Uncertainty for Business -- Update
Executives from around the world agreed on one big takeaway from the Conservative Party's failure to win a majority in the U.K. parliament: anything they thought they knew about Brexit was out the window.
"Nobody knows what this means for Brexit," said Richard Carter, U.K. head of BASF AG, who was attending a dinner in London for the German Chamber of Commerce on Thursday, as exit polls indicated a so-called hung parliament. "This will have huge implications."
Theresa May's Conservatives still hold more seats than any other party after the election, but the prime minister's failure to secure a majority--and the strong showing by Labour and the Liberal Democrats-- scramble British politics just ahead of the start of negotiations over the U.K.'s exit from the European Union.
Mrs. May said Friday she wouldn't step down as head of her party and would attempt to form a minority government, relying on other parliamentary parties to pass legislation. Labour leader Jeremy Corbyn has instead called for her resignation and said he would try to form a government--but Mrs. May has the first crack at doing so.
For businesses around the world, Brexit had presented plenty of uncertainty already.
Mrs. May called the election to bolster her thin majority and strengthen her hand in negotiations with Brussels over the terms of the EU divorce. Those talks are slated to start in June and Mrs. May has telegraphed she is prepared for a clean break, even if that meant exiting free trade and other agreements that have made cross-channel business easier.
That "hard" Brexit stance has spooked investors and many executives. Mrs. May's disappointing showing on Thursday could soften her position, raising hope among business leaders her stance may soften.
Ulrich Hoppe, director general of the German-British Chamber of Industry and Commerce in the U.K., said he hoped the vote would "lead to the country reassessing its position on Brexit."
The U.K. could become more open to compromise under a different government, Mr. Hoppe said.
The chief marketing officer of Ryanair Group PLC expressed similar hopes regarding Brexit on Friday. The airline, Europe's largest by passenger numbers, has been an outspoken supporter of the U.K. remaining in the EU.
"The U.K. election result shows that some people have changed their mind on Brexit. I would love to see a soft Brexit back on the agenda," tweeted Ryanair's Kenny Jacobs.
Some companies had already made concrete moves to protect themselves from Mrs. May's vision of Brexit. Whirlpool Corp., for instance, has said it would keep an English dryer factory open amid a wider European restructuring, so that it can continue supplying British consumers without having to worry about new tariffs or currency swings related to Brexit. Whirlpool Chief Operating Officer Mark Bitzer called it "industrial hedging" in an interview in May.
Now, that move might seem hasty, if the Conservatives are forced to water down their "hard" Brexit stance. A Whirlpool spokesperson didn't immediately respond to a request for comment on Friday.
The pound fell Friday, continuing a decline from late Thursday after exit polls indicated the likely election results.
The FTSE 100 index of blue chip companies rose Friday. The index is made up of internationally focused firms, many of which benefit from a weaker pound.
Other executives said it was early days in assessing the consequences of the election.
Fabrice Brégier, Airbus Chief Operating Officer and president of Airbus Commercial Aircraft, said the company would take a "wait and see" approach. Airbus, which makes the wings for all its planes in the U.K., said it was taking a long view, rather than focusing on short-term currency fluctuations or even election outcomes.
"We will have to look at the long-term consequences of Brexit. This is what it is about," Mr. Brégier told reporters.
One big loser on the London stock market were shares in Sky PLC, the U.K.-based broadcaster. Rupert Murdoch's 21st Century Fox Inc. has made a bid for the 61% of company it doesn't already own in a roughly $14 billion deal. The transaction is contingent on U.K. government approval.
Without a clear sense of who will be in power guiding that decision and when it might materialize, investors sold down shares by 2.7% early Friday. Mr. Murdoch and his family are major shareholders in Fox and News Corp, publisher of The Wall Street Journal.
Write to Nina Trentmann at Nina.Trentmann@wsj.com and Robert Wall at firstname.lastname@example.org
(END) Dow Jones Newswires
June 09, 2017 10:01 ET (14:01 GMT)