LONDON — Despite continued apprehension over Britain’s vote to exit the European Union, nerves in the world financial markets have begun to settle, with London’s FTSE 100 closing Wednesday above its pre-referendum level for the first time since the historic vote.
ITV, which suffered an initial 21% share price fall the day after the referendum, wiping almost £2.5 billion ($3.36 billion) off its stock market value, saw prices up by 7% at 177.7p a share. However, the share price remains 20% down from what it was before last week’s referendum.
Sky’s share prices also saw a boost Wednesday, with shares up 4.15% at 853p per share, while pan-European media conglomerate Vivendi, based in France, was up 4.66%. Germany’s ProSiebenSat saw a 2.43% rise.
The British pound gained 1.2% against the dollar to nearly $1.35 as the trading day in Britain ended. The upticks came as a relief after world markets suffered their biggest two-day fall in history following the U.K.’s decision to leave the European Union by a public vote of 52% to 48%.
But media analyst Claire Enders said that any celebrations were premature, suggesting that the market stabilization would be short as Britain braces for a potential recession.
“Things have become calmer in the financial markets as no one is pressing the button in the political sphere,” Enders told Variety. “But the reality is we are settling in for a very long-term political crisis with no chance of a common unified position before autumn.”
She added that it was “very unusual” for a political crisis to cause an economic crisis, as the reverse was normally the case. “We in the business community are doing all we can to calm things down, and that’s working and the wheels are moving,” Enders said. “But it’s a short-term stabilization, and there is no doubt that a 20% drop in the value of ITV is very significant. And overall, the picture indicates a strong chance of recession.”
In a hint of what could come when Britain’s pullout from the E.U. is complete, telecoms giant Vodafone warned that it could move its headquarters from the U.K.
In a statement, Vodafone said it was important for Britain to retain access to the E.U.’s free “movement of people, capital and goods.” While it was too early to make any long-term plans for the firm’s headquarters, Vodafone said it would “take whatever decisions are appropriate.”
Vodafone employs about 13,000 people in Britain and is headquartered in London. It said that 55% of group profits in the last financial year came from its European operations, with the U.K. providing just 11%. The company is also set to start reporting its financial results in euros instead of pounds.
“Once the English language is shut out of Europe, we are not a strong position at all, we are in retreat,” says Enders. “The real swing is that all of the media stocks, roughly speaking, will be down 20-30% and that’s pretty significant.”