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Business Problems And Issues Caused By Brexit

Andrew Stuart
3 years ago
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Whether or not UK should leave the European Union is a big debate. HOW we leave or remain is a more practical issue for businesses. I have no wish to offer any political or BREXIT opinions. Since the beginning of 2019, I have been on business trips and spent time in Shanghai, Hong Kong, Mauritius, Malta, Dubai, Macedonia and Germany. The BREXIT view of business people in those countries ranges from mild surprise to shock but I found that nobody is disinterested. It is surprising to me that the people I met in all of those countries follow BREXIT closely. It is not as if the British people take a close interest in what is happening in Hong Kong or Shanghai (a city of around 30 million people), so it is clear that Britain still has some significant presence on the world stage. This is something of a two edged sword. Our indisputable visibility around the world is a fantastic medium for UK to project whatever it wishes, whether that is trade opportunities or views of the environment. Unfortunately, we are now projecting an image of chaos and uncertainty. In China I found that the Chinese respect the British people a lot but they are laughing at us over BREXIT. There is a perception that Britain is so strong that it should have dictated the terms of BREXIT to the EU so there is surprise that Britain is in such a state of uncertainty. This does not mean that the EU is now seen as some superior body; in essence it is not recognised other than for its harmonised trade tariffs within the Customs Union and the importance of those to China, for example, when exporting to EU countries. They do not talk of trade with the EU; they speak of the individual countries to which they export or import. The problem here is uncertainty. The further delay to concluding an exit from the EU extends that uncertainty further, stopping investment into UK and leaving existing investors anxious. We may see many companies relocate their headquarters to other countries, particularly where those companies have foreign owners. It is scandalous that companies having to deal with shipping documents have been left as little as days away from not knowing what documentation they will need to continue to export or import. In a world of “just in time” stock control, this can cause breaches of contract for failing delivery times. I am sure HMRC will not say to them that they do not have to pay their taxes this month, by way of compensation. If certainty does not replace uncertainty soon, it may impact heavily on growth in UK and with that, employment and tax revenues. Tax is already a significant percentage of GDP. If GDP is less, so are tax revenues. It is often forgotten that increasing tax revenues is not just a function of tax rates; the same percentage of a bigger pie is much more effective and sustainable in the long term. So how do companies prepare for BREXIT? It is a matter of preparing for the unknown. There are ways of mitigating the risk but every company is different with a different set of circumstances to address. A good positive attitude and that great British sense of humour are a good start. British companies still make good trading partners. Our foreign trade partners still respect us for these and many other things, including our great sense of fair play but they now know that the bulldog has gone.