Why business should get behind Britain

Man dressed in a Union Jack suit, waving Union Jacks © Alamy
Stop the whingeing and fly the flag

In the nine months since the referendum on Britain’s EU membership, we have been engaged in a phoney war with the EU. The government has stated its intention to leave, but nothing has actually happened yet. It is only once Article 50 is triggered, and the UK gives formal notice of its intention to quit, that the real negotiations will begin.

We will then discover what the exit bill will be, whether it will be possible to stay inside the single market, whether we will have some other form of trade agreement, and what kind of deal might be cut for the City to sell financial services into Europe. That process will, no doubt, be fraught, with lots of brinkmanship on both sides. But business, and big business in particular, can help the UK get the best possible deal.

First, drop the scaremongering. The referendum is over, and it isn’t going to be re-run, so there is no need to keep on warning about all the terrible things that might happen when we leave. True, a company might be feeling nervous about this or that aspect of its business after Brexit. And it might hope that by voicing those fears it will get special treatment from the government, and strengthen the chances that it will get a better deal for its industry in the negotiations with the EU.

The trouble is, that is a mistake. It weakens the UK’s hand to have lots of companies arguing they will be in trouble outside the single market – and it will simply encourage the EU to demand tougher terms. Just stay silent – and the chances of a good deal will be higher.

Second, boost investment. If there are some plans in place for a new factory, call centre or building project, then take a deep breath and press the start button right away, even if the outlook is uncertain. In fact, for all the forecasts of an immediate recession after we voted to leave, the economy has done a lot better than even the most swivel-eyed Ukipper would have expected. The more investment grows in the UK over the next year, the stronger our hand in the negotiations will be.

Thirdly, trade more – and work on building links on the continent. While the exit negotiations are under way, British companies should put more effort into building exports and strengthening customer bases right across the continent. Over the next year there will be lots of noise about how Britain is turning its back on Europe, how trade is about to freeze up, and about how barriers will come down once we leave the EU.

Most of it will be nonsense, but that doesn’t mean some people won’t believe it – and that may make them more reluctant to buy things made in this country. Reassure business and trade partners that the UK is just as open as it always has been. That way, trade is more likely to continue to grow.

Finally, argue against tariffs. If it is a hardish Brexit, as looks likely, then we may end up with the right to impose modest tariffs on European goods, just as the EU will have the right to impose tariffs on our exports. Some companies will feel tempted to use that as an opportunity to argue for protection from European competition. After all, if that German or Italian rival suddenly faces a 3% or 4% import duty, that makes its easier to compete against them.

But that would be a mistake. In every market, even if the EU imposes tariffs on us, don’t retaliate. Instead, companies should just ask for completely free trade. Sure, there might be some gains to protectionism, in the form of a slightly higher market share, or slightly higher profits. But it will only be very short-term. In the medium-term, it is best to compete in an open market – because protectionism hurts the country that imposes it the most.

  • LG

    So essentially, suck it up, stay silent, don’t complain about the ‘will of the people’, don’t point out the obvious difficulty it’s putting you in, spend your money regardless – and you’d better like it.

    Great advice. Do you get paid for this? I can see why some companies are upping sticks and heading off.

  • smspf

    Why would business ‘drop the scaremongering’?
    They will already know by now what this campaign of the indigenous law societies to ‘make our own laws blah blah blah’ would have cost them. Why not ask them what they think instead of typing vacuous drivel.

  • wanted

    The EU orchestrating and engaging in a trade war in a fit of pique because their rule has been rejected will probably lead to failure of the Euro and collapse of the EU.
    For a country with a weakened currency and a trade deficit with the EU, we can definitely charge symmetrical tariffs on EU imports unless the EU lets us have zero tariff single market access and there is little the EU makes that we cannot source for ourselves elsewhere, or better still, start producing/manufacturing ourselves. We have a trade surplus with the US and they would definitely be interested in increasing that if it also meant balancing that more evenly if we import and export less from our pettish protectionist neighbours. We also don’t have to charge discriminatory tariffs on cheaper-than-EU suppliers if we don’t want to. WTO rules on maximum tariffs not minimums.

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