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Bracing for Brexit – Event review

Created: November 2017

In November HW Fisher & Company assembled a panel of leading thinkers from the worlds of business, politics and journalism to assess the impact Brexit has had – and will have – on British business.

Six months on from the formal start of the UK’s divorce from the EU, there is still precious little clarity on what Brexit will ultimately look like, and how it will affect the way British businesses trade, recruit and pay tax.

Hosted by the radio presenter and journalist Nick Ferrari, HW Fisher’s Bracing for Brexit event lifted the lid on these issues and sparked a flurry of questions from the audience, proving Brexit remains as hot – and divisive – a topic as ever.

Here’s a summary of the points made by the four panel members.

Mike Cherry, Chairman of the Federation of Small Businesses

At the time of the 2016 Brexit referendum, the FSB’s 165,000 members were split roughly 50/50 on whether the UK should leave the EU.

But whether they voted Leave or Remain, most FSB members are already feeling the impact of Britain’s decision to leave the European club.

While exporters have benefitted – and importers suffered – from the fall in the value of sterling since the referendum result, the greatest single issue small businesses face now is the lack of clarity, both on what Brexit will eventually mean but also on the timeframe.

The resulting uncertainty is having a substantial chilling effect, with many SMEs opting to delay big investment and business decisions until more detail is known.

The FSB is therefore urging the government to ensure there is a smooth and gradual transition to life outside the EU, so businesses have time to plan accordingly.

Another issue concerning the FSB is businesses’ access to talent, with latest figures showing one in five SMEs have at least one employee who is from another EU country.

With thousands of British businesses currently benefitting from the free movement of people allowed by the EU, Mr Cherry said it is essential that any post-Brexit immigration system should not impose extra costs or red tape on companies that need to recruit and retain foreign staff in order to grow.

David Smith, Economics Editor, The Sunday Times

Mr Smith outlined the enormity of the task both Britain and the EU face in unpicking the ties that bind them.

In the 44 years since the UK joined the European club, Britain’s economy, laws and people have become ever more integrated with Europe’s – and disentangling that web of connections will take many years.

One of the most difficult issues to resolve will be trade. Mr Smith argued that Brexit would be deemed a failure if it did not also involve a free trade deal, and that the prospect of British and European businesses having to pay tariffs to trade with each other was unthinkable.

However he also warned that even if cross-Channel trade does remain tariff-free, whether it also remains frictionless is another matter. Even a slight increase in border checks for goods could add significant delays and increased cost to crossborder trade.

Another top priority for British businesses will be their ability to retain and attract skills. The combination of the weak Pound and a perception that the UK is now less welcoming to EU workers has put many Europeans off coming here and led some of those already here to leave. Mr Smith said it was essential that the government prevent an exodus of the foreign workers on which much of the economy relies and to ensure continued access to those workers.

Rt. Hon. Lord Feldman, former Chairman of the Conservative Party

Charting a course through the Brexit negotiations is a task of huge complexity, according to Lord Feldman.

The task is completely unprecedented, and Britain’s negotiators must engage not with one interlocutor, but with an organisation that represents the diverse – and sometimes conflicting – interests of 27 other EU nations.

In addition, the EU’s negotiating team will be keen to prevent any perception that the UK has been given an easy ride, for fear of encouraging other Eurosceptic member states to consider leaving the EU too.

This is not to say Brussels will seek to take revenge on the UK, but it has no interest in making it easy for Britain’s negotiating team.

Given these challenges, the negotiators will have to work incredibly hard to agree a bespoke and comprehensive Brexit deal before March 2019 – the two-year anniversary of the triggering of Article 50.

The other option, and perhaps the most likely scenario, is that Britain will seek a free trade arrangement along the lines of the recently introduced EU-Canada trade agreement, which lifted tariffs on 98% of the goods traded between EU countries and Canada.

However Britain’s negotiating team will have to ensure any EU-UK agreement includes services as well as goods, as services account for the majority of the UK economy.

Toby Ryland, Corporate tax partner at HW Fisher & Company

Britain may be suffering from the lack of a timetable, clarity and leadership over Brexit, but both politicians and businesses should stop complaining and get on with making the best of the process, according to Mr Ryland.

He reported that on the business front line, the impact of Britain’s decision to leave the EU is already being felt, albeit to varying degrees. While the weak Pound has hit importers hard and inflicted a downturn on the confidence-reliant construction industry, many service businesses continue to thrive.

Looking to the post-Brexit future, he argued there’s no reason a non-EU UK wouldn’t continue to be an attractive proposition for foreign investors.

In his view, Britain’s appeal to international companies stems from more than its membership of the EU. The UK’s low rates of corporation tax, as well as its clear and workable – albeit complex – tax system and strong rule of law will continue to draw global investors irrespective of Brexit.

For British businesses, whether they see Brexit as an opportunity or a threat is ultimately a question of attitude. Brexit will not be without its costs, but companies that are nimble and bold enough to expand into new markets should not be blown off course. Together with their advisers, business leaders must seize the initiative to adapt to the changes of Brexit, and make a success of it.

He concluded with some historical perspective, arguing that British business has shown impressive levels of resourcefulness and flexibility in the face of previous challenges – and ended on an optimistic note, suggesting that in a decade’s time many businesses “may wonder what all the fuss was about.”

E advice@hwfisher.co.uk