How to prosper from Brexit

By Keith C Pye, Director

Okay. Let’s get the divisive bit over with right up front. A little over half of the nation wanted to leave the EU and a little under half wanted to stay. The problem with the referendum was that it was set up without a threshold, so a bare majority won.

So, where to now?

Well, we can continue our petty bickering about the pros and cons, and keep complaining about the “unfairness” of it all; or we can buckle down and get on with making the best of what could be quite a promising situation.

We at Pye Tait have spoken to a great many employers on the subject in the last year or so, the latter is not only the most sensible way of proceeding, it is also the road British businesses have chosen.

Clearly, we need to ensure certain things happen – that immigration is not so constrained that it damages our employment market; that trade is as free as we can make it; and that we are as free as possible to make our own rules and regulations after the event.

The rest of the EU is hurt, and a little offended, by our decision but they recognise that the UK and the EU must remain extremely close after Brexit and that the negotiations must not damage the prospects for either side. The UK and the EU are huge markets for each other’s goods and services. The UK also happens to be a major military power in NATO and we need the fast-developing military weight of the EU as much as they need ours.

Brexit, therefore, is never going to be as bad as the doomsayers predict. Already, more than half of our exports by value go to the rest of the world – a proportion that has been increasing for the past ten years. At the most conservative estimate, the UK is worth £320bn a year in exports to the EU – around 16% of the EU’s goods and services exports (cf 17% to the USA).

It is incredibly unlikely, therefore, that the UK will be visiting the dark side anytime soon. Australia, New Zealand, Canada and the US all have strict immigration laws but they still manage to grow and prosper. Excepting President Trump, the world’s major leaders support free-trade. And Britain will soon regain a long-forgotten ability to strike trade deals with whomever we like on whatever terms we like. We often forget it, but the Commonwealth comprises a third of the world’s population and over a quarter of its nations. Perhaps that 2.4 billion market (of whom 60% are under 30 years of age) could become more than just a social and cultural talking shop?

Here at Pye Tait we try to help all sorts of organisations find ways through problems – from how to upskill their staff, to what sorts of national policies will work most effectively in given circumstances. Recently we’ve done a lot of work in the Brexit arena and – while businesses are worried and cautious – the good news is that they are also positive and keenly aware of coming opportunities.

The Government (as always) comes in for a lot of stick, but there are clear signs of positive progress on the education, skills, and business fronts – from action on digital skills (the new computer science curricula and the Digital Strategy) to the new Space Industry Act – one of the most far-seeing sets of space regulations in the world. We have a world-class reputation for digital technology and we have one of the most vibrant start-up environments in the world. In 2016 over 650,000 new businesses were established – second only to the USA. The UK aerospace sector is still one of the world’s best. Rolls Royce sold almost 500 engines in 2017 and BAe Systems turned- over £19bn in aircraft and ships. A world leader in satellite technology the UK’s space sector accounts for 6.5% of the global industry and is growing every year at the same rate. And the UK motor sector is no slouch either – 30 manufacturers and an output of over 1.7m vehicles last year. Even the oft-derided UK shipbuilding industry is growing at not far short of 5% a year.

Yes, there are plenty of reasons the UK could fall flat on its face. But our talks with small and medium-sized businesses around the nation clearly show that the commercial bedrock of the nation is taking things in its stride and cautiously adapting to a new paradigm. SMEs employ 60% of the UK workforce and contribute a little over half of private sector turnover. They are adapting to employment challenges and to a more aggressive exporting stance.

How to prosper from Brexit? Simple. Follow the lead of every small and medium sized business in this country. Our research shows they know the fundamental truth: Brexit will be as good or bad as we make it.

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