Lets Get Brexit In Perspective

Subhash V Thakrar FCA FRSA Tuesday 12th December 2017 05:25 EST
 
 

Firstly, we should congratulate our Prime Minister May, the Brexit minister David Davis and their team to have reached an agreement of principles and move negotiations forward to the next stage. This has been against all odds and constant criticism from the media, opposition politicians and also sometimes from within the Tory party.

 

I must declare that I voted and also campaigned to remain. However, the people of the country have decided to come out of Europe and I am now looking to achieve the best out the decision we have made. Often when one accepts a different reality and starts applying his or her mind to what can be achieved, new ideas and thoughts come along and bring fresh opportunities.

 

The Brexit decision has been the biggest decision that we have made since the World war; even bigger than the time when we decided to join the European Union. If it was a war would our media and all political figures continue to constantly criticise and find faults in the Government that is leading the battle? Would there not be a private pact between all stakeholders to draw certain red lines and then let the Government get into negotiations with confidence?  A good analogy is a football or cricket team playing for our country. Here, we will publicly support the team and give them all our  backing. Why can't we do the same by backing the team that is batting for our national interest?

 

Our politicians involved in negotiations are quite bright and very experienced people supported by  technical experts. They cannot be where they are today otherwise. Of course this is a new course that UK and EU have not travelled and that will always bring some uncertainty. If the tables turned  and if the opposition politicians were in the front line instead of the current team, are they going to do any better job with the negotiations?

 

So we must allow our team to get on with the tough negotiations and not hinder their work by constantly looking to find a fault with them.

 

Many commentators present a completely doom scenario as if in 2019, we shall stop doing anything with Europe. No business will happen nor will anyone easily travel to and from U.K. Irrespective of where the negotiations go, a complete freeze will definitely not happen. Yes the outcome may make an impact on trade between the two sides.

 

Let's get this in to perspective. The fact is that London actually voted to remain in Europe. It was the northern part of the country that voted to leave. There are around 2.37m EU nationals working in the U.K. 25% of London’s workforce are EU nationals which is far higher than Northwest or Scotland where the figures are 7% and 6% respectively. EU nationals contribute £26bn to London’s gross value. 24% of the financial services and 36% of construction employees are EU nationals. So in London, we need EU nationals and there is reason to have a different treatment for London. The London Chamber has been calling for London working permit.

 

UK exports to EU are around £240 bn  and these represent 12% of our economy(2016 figures). Exports from EU to UK are around £390 bn and represent 3-5% of the size of EU economy. Of course Brexit is bound to affect trade between the two geographies and the impact will depend on if we have a hard Brexit or a soft one. Only 11% of UK companies are involved in selling to EU. One thing is certain, all this business is not just going to disappear completely when we leave the EU. It may come down by 10 to 15% due to restrictions and tariffs that get imposed. EU will still want to buy UK goods and services and so will UK.  In fact, if the the British pound remains low as now against the Euro, our import costs may not really rise much.

 

We must ask the question. Will both sides of negotiators be willing to take the position where all the above business collapses? I doubt if they will take such a risk on behalf of their economies. So they will play tough ball initially but ultimately there will be some compromise.

 

The UK has always been a free trader and so coming out of EU is something we can address. I have led many a trade mission for the London Chamber of Commerce and know that UK brand is very well respected in the rest of the world. The markets of China , India and Africa have really not been taken to their full potential. There is also the Commonwealth and the US markets that can be expanded. Our business people have been concentrating on EU business as it is easy and convenient. This has been at the expense of ignoring the outside EU business.

 

One may ask, what do we export or can we export. Well, just to name a few, we have great potential to export  educational products and services, professional services, cars, whisky and English premiere league.

 

UK has always been attractive for Foreign Direct Investment(FDI). This is due to our advanced legal systems, time zones ( the Greenwich Mean Time gives us a huge advantage to be connected to the World most of the day), English language(EU will still do its business in English) and we have world’s best Universities.

 

UK can rely on World Trade agreements even if it is in transition. The current negotiations indicate that we may get a transitional arrangement. Either way, one must not panic. We must allow our team to negotiate and support them. As we know nothing is agreed until everything is agreed.

 

For EU, UK will just be another 3rd  country. But it will be closure to Canada and bigger than Norway which are both outside EU and actively doing business with EU. UK will still remain uniquely integrated with EU in many other ways.

 

We are the 6 th biggest economy in the World and have uniquely able and advanced business community. All we need is to change our focus on the non EU market. We may just surprise ourselves of our potential if we take a positive and constructive approach.

Subhash V Thakrar FCA FRSA

 

Vice President and Past Chairman, London Chamber of Commerce and Industry.

 

www.subhash@ Subhash Thakrar.com


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