Business and Brexit: Focus on the fundamentals
Answers as to what leaving the EU will actually mean for business may be in short supply, but members attending the 'Beyond Brexit' ICAS Insight Breakfast in Edinburgh came away with some constructive advice on managing the current period of uncertainty.
Speakers at the event included Michael Moore CA, former Secretary of State for Scotland and now an adviser with PwC; Sir Brian Souter CA, Deputy President of ICAS and Chairman of Stagecoach; and Charles Livingstone, a partner with law firm Brodies and an expert in constitutional law.
The breakfast was chaired by Catherine Burnet CA, a Partner at KPMG and Chair of the ICAS Oversight Board.
Michael Moore CA noted that Brexit has moved on from the initial surprise of the referendum result and its political aftermath, and until Article 50 of the Lisbon Treaty - the formal notice of the UK’s intention to leave the EU - is triggered, we are in a phase of “political positioning”.
He warned: “Many people have concluded that, at this stage, there is no point in doing anything. That would be a mistake, in my view.”
He stressed that it is possible that the two year negotiation period under Article 50 could result in no deal, and the time limit for talks cannot be extended without agreement from all the other 27 member states. Also, he said, we do not know what kind of transition period will be agreed, if any.
“The workload for the UK government is absolutely vast," he added.
Sir Brian Souter CA noted that there are a number of other potential events that would probably have a much greater impact on the world economy than Brexit, ranging from another global financial crisis to an international flu pandemic or a major earthquake in Japan.
He emphasised that there are many positives right now: UK households are at last seeing an increase in real earnings and this is driving the economy, while the UK’s strengths, such as London’s position as the leading global financial centre will not disappear.
However, he also said that “the big issue is uncertainty” and that, in his view, the deal to withdraw should be done quickly.
Charles Livingstone explained the mechanics of Article 50, noting that the negotiations are set to include not only the terms of withdrawal, but also the framework for the UK’s future relationship with the EU.
As pointed out, as these negotiations can be concluded by qualified majority voting, it will be in the UK’s interests to get as many key points agreed at this stage as possible, rather than leave them to trade negotiations post-Brexit, where unanimous agreement among the member states would likely be required.
The panel discussion also included consideration of whether they may yet be an economic downturn to come; what the new immigration policy will mean for EU citizens already here; the ability to hire from Europe in the future; and what businesses should do in the short-term.
Sir Brian advised: “Concentrate on the fundamentals of your business. Don’t think about Brexit, because it will probably not impact on your business, at least the next nine months.”
Michael Moore CA, however, said: “Everyone is going to be affected by Brexit, and someone in your organisation needs to understand what it will mean for your business.
“This is the phoney war, and the idea that we can know how it will pan out in the next 18 months or two years is fanciful. Even if we do get a quick deal it will not resolve the economic uncertainty.”
Charles Livingstone advised: “If you think your business is exposed, don’t let Brexit be something that just ‘happens’ to you.
"Make your views heard via your trade or industry organisation. Once Article 50 is triggered it will be hard to change the UK’s starting negotiation position.”
Hear more Brexit views from leading professionals at the 2016 ICAS Conference 'Innovation and Entrepreneurs...in Brexit Britain'.
The event features a panel of top speakers from the business and political sphere, including a world-renowned entrepreneur, the CA leading the world's largest conservation charity and the world's most infamous rogue trader.