Blue-chip giants dismiss panic over a no-deal Brexit

Business will carry on ‘pretty much as normal’, say British Airways owner IAG and RBS chief

TWO of Britain’s biggest companies, RBS and British Airways owner IAG, have dismissed mounting hysteria over the potential fallout from a no-deal Brexit, saying businesses will run “pretty much as normal”.

Panic levels have been rising in recent weeks over the possible implications of the UK crashing out of the EU without an agreement, with the Government stockpiling food, and pharmaceutical companies building up drug supplies. The Institute of Directors issued a warning earlier this week that too few companies were making preparations for a no-deal scenario.

However, leading figures from two of the UK’S most important industries – banking and aviation – dismissed concerns companies will be thrown into turmoil after March 2019.

RBS chairman Sir Howard Davies said “banks can cope” with a no-deal scenario, agreeing with comments made by Bank of England Governor Mark Carney that high street lenders would prove resilient.

“We don’t have any knowledge through our own business which tells us there’s a disaster on the way, or which tells us there are no problems.”

However, he said more could be done to relieve uncertainty. “I would say people would love to have more clarity and in the meantime they’re sitting on their hands a bit.”

IAG boss Willie Walsh said while there were “issues that need to be addressed”, aviation would continue “pretty much as normal” after Brexit.

Speaking to Sky News, he said he remained “confident” that a comprehensive air service agreement would be agreed between the EU and the UK, which would mean flights would not be grounded between the two regions.

Separately, on an earnings call, Mr Walsh said: “It’s not rocket science. There are issues that need to be addressed but we have dealt with these things in the industry. In many cases there is a template there to be used because we have negotiations all the time on bilateral air service agreements.”

Both companies yesterday posted interim results, propelling them to opposite ends of the FTSE 100 leaderboard. RBS was among the biggest risers on the day, after it drew a line under a disastrous decade for the bank with its first dividend since its £45bn state bailout in the financial crisis.

Chief executive Ross Mcewan said the turnaround was almost “fully complete” after the bank had slimmed down and taken billions of pounds of misconduct charges. Its first-half profits slipped 6pc after it had to top up existing provisions to cover a US Department of Justice (DOJ) fine.

The reinstatement of a dividend should make RBS a more attractive prospect for investors and help support a further sale of Governmentowned stock by the Treasury. RBS closed up 3.1pc at 257.8p yesterday.

Meanwhile, IAG shares slumped, closing down 2.2pc at 669.8p, making it the biggest faller on the FTSE 100.

IAG posted a first-half profit before tax of €1.7bn (£1.5bn), up around 24pc, primarily as a result of a €628m one-off gain from the closure of BA’S final salary pension schemes.

Although the results were broadly in line with City expectations, Hargreaves Lansdown’s George Salmon said investors were spooked by the impact of air traffic control strikes.

Mr Walsh also revealed IAG was preparing to dump a stake in low-cost airline Norwegian Air worth tens of millions of pounds, admitting takeover talks were “not going anywhere”.

IAG, Norwegian’s fifth largest shareholder, bought its stake earlier this year before launching two approaches.