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Brexit – Opportunities Amongst the Challenges
Amid all the noise about Brexit, it’s worth looking at exactly what businesses can do about it. Not much, you’d think, because only the people of the United Kingdom can decide their fate. When they vote in the referendum on 23rd June, they’ll determine the fortunes of many others, around them and after them, for years to come, writes John McGrane from British Irish Chamber of Commerce and Dublin Chamber of Commerce.
The EU is such a good idea that if we didn’t have one, we’d have to make one – for peace, security, fairness and achieving the ambitions of our parents, ourselves and our children.
The EU certainly needs fixing and it would be far better for Britain to lead than leave so we can fix it together. But it’s their choice.
For business, life will go on, either way. Every day, business owners and their staff get on with buying, selling, hiring and taking care of customers, come what may.
In an island economy, we’re natural traders across our borders – we make too much of some things locally and we don’t have enough of some others. So the rules about trade are actually important: when a tariff or a levy is imposed on our exports, they’re less competitive and we sell less. When a tax is put on an import we need, our costs go up. So we do less business and we face increased unemployment. Clearly not a good idea. Which is why it’s good for everybody to have the UK remain in the EU and complete the job of building the largest open market network in the world. Because open markets grow trade and that grows investment and jobs, and that grows wellbeing and security for all our citizens. That’s an ambition worth standing for. And if you don’t stand for something, you’ll fall for anything.
But, don’t let an unambitious Brexit put you off your ambitions. Larger firms face barriers in many parts of the world and may have the resources to cope. But smaller businesses, often family-owned, can be pragmatic and adaptable. A little forward thinking may prove useful now. Change may be opportunity as well as threat. Trading between Ireland and the United Kingdom of Great Britain and Northern Ireland is filled with potential (which is to say we do a lot, but still not nearly as much as we could). Manchester is five times the size of Dublin and there are still thousands of firms in both cities that haven’t yet connected, let alone traded. And the time it takes between Cork and Liverpool is as fast as between Cork and Dublin.
Trading in your next country is as easy as trading in your next county. The only difference is the currency and you’ve plenty of ways to manage that. Most of the trading rules today are the same and we get on pretty well together. You should also be looking at exporting further afield and technology makes that easier too, but not as easy as trading next door.
No doubt, Brexit messes things up – it immediately creates uncertainty so businesses can’t plan clearly. Some, indeed, will do more business from Ireland and that creates more opportunities for their suppliers. Becoming Norway or Switzerland or Canada (or even Albania) is not an answer: most of the so called Free Trade Agreements aren’t. They restrict important things like Food trade, they require free movement and payment to the EU and full compliance but no say in the rules, so that’s not what the UK will leave for. And there will be no quick Special Deal with Ireland – why would the rest of the EU states, most of which don’t have big trade surpluses with the UK, give a concession to a leaver and one small country that remains?
So expect a long (ten year long?) messy process of working out the consequences if the UK leaves the EU. Meantime, expect some restrictions and plan ahead. The EU imposes lots of barriers on imports into the EU from non-Members (like Norway – which faces a levy of 12% on its exports of smoked salmon to EU markets – and charges a 300% tariff on imports of French cheese into Norway). The average level of duty on imports into the EU is 5.2%, more for some things and less for others. A “tax” of 5% could kill your net margin (and some sectors are most sensitive) but that’s less likely if you make a plan to sustain it. Like any other cost increase, plan to manage it and offset it against other cost management or sales growth into your extended trading base. And don’t worry about restrictions on travel: we don’t expect Traders to be barred from all the flying, sailing, training and driving that they currently do, though the paperwork for goods might be more tiresome. We’ll take that in our stride.
Relationships will be Key
Most important, as elsewhere in your business and life itself, are your relationships. You’re surrounded by great people who can help you rise to the challenge of a Brexit. Talk to the Bank and your other trusted advisers about foreign exchange hedging and customs management. And start thinking about establishing a base in the other country so as not to get “locked out” – Enterprise Ireland, UK Trade & Investment and the other State agencies will give you all the practical support you need to make that happen. And the Chambers across the two islands are geared to connect you with trading partners ready to do business. Now’s the right time to upgrade your engagement in networks for referrals, participate in trade missions and be ready for the opportunity that change always brings.
The Chambers will work with the two governments and with Europe to make any Brexit as sustainable for business as possible. So you can be free to focus on ambition and opportunity – across Ireland, Scotland, England, Wales and Northern Ireland!
- For further information on this topic, please visit our Brexit Centre
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Please be aware that all of the views expressed in this Blog are purely the personal views of the authors and commentators (including those working for AIB as members of the AIB website team or in any other capacity) and are based on their personal experiences and knowledge at the time of writing.
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