We held a breakfast discussion focusing on how businesses are dealing with the uncertainty caused by Brexit. The feeling around the room was that UK businesses are tired of working through uncertainty.
The political agenda is a continuation of the Brexit campaign, focused on borders not businesses, which is impacting on contingency planning and decision-making. But the room agreed there was a real opportunity to create a positive tone and grow ‘Brand Britain’, through promoting the assets the UK has to offer.
Our gathering of CFOs from PLCs, PE and private companies reaffirmed that businesses want certainty.
Is was agreed that if this situation was happening at a company level, the deadline would have been extended by now. But Brexit isn’t just impacting a company, it’s impacting a nation!
‘UK PLC’ currently has no leader, no CEO. Who is driving our commercial agenda, setting and leading the vision? There is simply no decision support or no strategic think-tank. Business leaders are struggling to position the future from a commercial and economic point of view. London is a city full of deal makers and yet the government hasn’t tapped into any of them so far.
Consequently, countries like the Netherlands have been unwitting beneficiaries of Brexit so far. Their financial district is growing exponentially due to the uncertainty in the UK.
Cost of contingency plans
This uncertainty has forced businesses to further advance contingency plans with multiple scenarios. But which scenario do businesses invest in? If Brexit extends for another six months, how much more do businesses spend on contingency planning? And how many contingency plans do they need for something that may not happen? Every contingency plan costs money and they take away from using investment for growth. And this is before we even know the future trading relationship with the EU.
Do businesses have the budget to build numerous plans or is using professional advisors more sustainable? There is an opportunity here for increased interim activity, to avoid initial set up costs until a way forward is determined.
For example, UK online retailers who sell to customers in Europe face challenges around the duty and import VAT regimes that may come into play. This concerns the base on which duty will be paid on imports to the EU, how customer returns to the UK will be dealt with from an import VAT perspective, and how much effort should go into planning for a no-deal Brexit versus waiting for the new trading arrangements to be negotiated.
On the other hand, are businesses using Brexit as an opportunity to cost cut and clean up their houses? Are the recent potential relocations at Airbus, Dyson, Honda and Nissan a response to Brexit, or an economic result of a changing market? There have been plant closures before, especially for car manufacturers. Winston Churchill once said, “Never let a good crisis go to waste”. We saw this back in 2008, when banks made large scale changes, based on the opportunity to do so.
Brand Britain and the assets of the UK
Surprisingly the consensus for the future was positive, with most seeing an opportunity to positively present “Brand Britain”.
Our image has certainly been damaged by the lack of direction from our politicians. How quickly can Britain recover and how do we sell the future and get “Brand Britain” back?
One of the suggestions focused on taking advantage of the UK’s service economy. Creating a Singapore style system, where there is a low barrier to entry for businesses, with low duties and customs, in order to create a situation where we are the preferred HQ for this industry.
People around the table felt that the UK brand was still very attractive. London is one of the three largest cities in Europe and five of the world’s top 20 universities are in the UK, making it attractive for anyone to come and study here. There is also a high recognition for the executive talent that work in the UK, who lead strong teams with a balanced culture.
People currently aren’t that nervous about coming to the UK from the EU. The administration of the country functions well and is better organised than many European countries, especially those where the stability of the government is questionable.
There are opportunities and there is a huge sense of positivity, more so than initially thought. But where and when is the up point on the curve and who will take advantage of it to value and invest in Britain?
Let’s get hold of our brilliant business leaders and ask for their help. Using their extensive network, we can sell the value of our country to the rest of the world and get them to invest in Great Britain!