The chairman of the British pharmaceutical firm AstraZeneca plc (ADR) (NYSE:AZN), Leif Johansson, has said that a transition period of three years is necessary when the United Kingdom quits the European Union bloc in the next two years. Additionally it will be important for the UK government to state clearly what it will ensure over the long term.
At the moment uncertainty over how the United Kingdom will relate with the European Union after the exit which will come into effect in March 2019 is hurting investment in the fifth biggest economy in the world. A situation where no deal materializes is likely to be the worst scenario for businesses.
Philip Hammond, the British finance minister also echoed similar sentiments when he said that the economy was being hurt by the prevailing uncertainty though he said a two-year transition period would be adequate. Boris Johnson, the foreign secretary, has also argued that two years was the maximum period necessary for the transition. As a result of pushing for a ‘hard’ Brexit, Johnson was rebuked by Hammond who added that there was no cabinet minister who was immune from getting fired.
Though Johansson was hopeful that a deal would be hammered before Britain quits the bloc, he added that there was still a risk attached to it. Consequently the pharmaceutical giant was making the necessary preparations in the event that a deal did not materialize though concrete plans were yet to be worked out.
Just in case
“There is a logic among the political leadership that you just don’t back down until the last minute. Then, finally, after pulling an all-nighter, you get to a result,” said Johansson.
One of the steps AstraZeneca is likely to take in the event of a no-deal includes relocating some of its operations in the United Kingdom to other countries in the European Union. This could include manufacturing operations as well as research and development facilities. Currently the Anglo-Swedish pharmaceutical firm has its headquarters in Cambridge where it is also putting up new research facilities and offices.
On Monday shares of AstraZeneca Plc rose by 1.15% to close the day at $34.27.