The Decision
The majority decision of the UK voting public is to leave the EU. The reactions across the board have been somewhere in the range volatile to explosive; the Labour Party Shadow Cabinet coming in at the latter end of that spectrum! However, that is simply taking advantage of an opportunity and ironically may be a salutary lesson for UK Plc in these circumstances.
There was always going to be a period of unrest whatever the outcome had been. The real issue is how long that unrest lasts. Whatever your original views and how you voted the decision has been taken and if we are going to come through this with least damage then we need to get on board with the exit from the EU and ensure that it is as smooth a process as it is possible to engineer and that we maximise the opportunities that this will undoubtedly create for a large number of dynamic, progressive and open -minded businesses.
Leaving the EU is mapped out and there is a process to follow that will not see the UK out of the EU for two years from when notice is given. So we are not heading into the unknown as far as the process is concerned but we are in terms of potential consequences.
Should we be panicking?
The answer has to be no. What the country needs at this time is some calm heads and a recognition that, irrespective of your view, this has to be seen as an opportunity and dealt with in an extremely positive and pro-active way. From an institutional point of view many things won’t change at all, some won’t change for years and only very few will see significant short term changes. The UK’s legislative framework will remain intact until Parliament changes it and we all know that bringing in new Acts of Parliament is a long drawn out process.
What does it mean practically for businesses on the ground which deal with other countries in the EU?
There are going to be no immediate changes whilst we remain in the EU from the procedure and legal aspect. The volatility of the markets and the movement of Sterling will of course have a direct impact but the fundamental point is that businesses, whether they be EU or non-EU, trade with UK companies because UK companies have something they want and not because they feel charitable towards them and there is no commercial reason why a business that has decided a UK company is the best supplier of that product or service will cease dealing with them because of a political event.
Relationships are what build great reciprocal trading arrangements and the priority now for most businesses will be to maintain and work on their existing relationships with their EU customers.
Equally EU businesses that supply UK companies are not going to suddenly cut off an income stream that their business needs. Ultimately new trading agreements will have to be reached with the EU countries but that presents a great opportunity to negotiate terms that work for the UK one fear that has been expressed is the fact that as the UK hasn’t had to negotiate trade deals for so long we don’t have the human ability to do it.
The Opportunity
If we don’t have the historic experience then that should be seen as an opportunity; an opportunity to bring in new ways of thinking, to use people who can think outside the box and are not constrained by the “that’s how it has always been done” mentality and are able to bring their intellect and imagination to bear in negotiating the best trading deals possible for UK companies going forward. It’s time for the UK to back itself and have the confidence in its ability to fend for itself. There are plenty of countries in the world who are not part of the EU and who manage to run their affairs successfully so not being part of the EU of itself is not the end of the world or a cause for undue pessimism or negativity.
The main immediate threat is the volatility of the markets and Sterling but we, and the powers that be, are going to have to take a grown up approach to this and realise that knee jerk reactions are simply going to fuel that volatility and prolong the period of uncertainty which is the worst possible outcome.
The markets and Sterling, will, as they always do, find their level and what UK businesses need is for that level to be found at the very earliest opportunity and that will only happen if everyone adopts a mature, calm and realistic attitude and maintains the commercial activity that they have been pursuing prior to the referendum but also search out new and better opportunities, as all good entrepreneurial businesses do as a matter of course.
Is there a real risk that major non-UK businesses will pull out?
There may be a risk but again it is not going to be overnight and the task now is to show them that the UK is still the place to be by pushing forward with all the work that is being done on improving infrastructure and connectivity, bridging the skills gap and generally creating the best environment for businesses to succeed. We need to make it difficult for them to commercially justify walking away from significant investment that has already been made in the UK.
We are where we are and it is now literally in our hands as to what we make of it and whether we descend into a pit of self-pitying pessimism and hankering after the “good old days”, which will only perpetuate recession or if we grasp the opportunities that will now present themselves and manipulate them to our best advantage and press forward confidently into a fresh, new, exciting era.
Should you require more information on this transitional period, please contact Richard Thomas, on 01244 354800 or richard.thomas@dtmlegal.com.
