With formal Brexit negotiations finally underway, Britain appears to be bracing itself. Neither the European Union or Prime Minister Theresa May appear willing to give any ground, and the deal is widely expected to be unfavourable towards the leaving party.
However, there are also a number of signs of life for the UK economy in a post-Brexit world. From the realities of the negotiating process to the ‘keep calm and carry on’ nature of British business, UK industries may not have as much to worry about as people think.
Most EU politicians still like the UK
The bulk of Europe has every reason to feel a little bit miffed at Brexit. The move has cast uncertainty over the European project, to the extent that many suspected the UK would be made an example of, in order to deter others from leaving.
But the reality is that a significant amount of goodwill remains for the UK, and even a few lingering hopes that it might re-join in the future. The prevailing feeling from the EU seems to be that the UK will come to miss it over time without needing too harsh a break-up.
On the day of Article 50 bring triggered, newspapers across the continent were rueful. Meanwhile, leading French presidential candidate was in London to affirm that he would not personally punish the UK for Brexit.
President of the European Commission Jean-Claude Juncker opened negotiations by stating that “Brexit was punishment enough” without imposing unfair terms on the UK, while a few days later, EU Brexit negotiator Guy Verhofstadt took a conciliatory tone, thanking the UK for its historic contributions to the Union.
This is not to say that negotiations will be easy; no separation of this magnitude ever could be. But the signs so far from the European community suggest that – if the UK is equally compliant – the process will not be made any harder than it needs to be.
External threats demand a united Europe
Events on the world stage provide a distinct impetus for the EU and UK to resolve their differences as quickly as possible. The surge in far right sentiments, the refugee crisis, and wars in Syria and Sudan all demand attention that Brexit should not overbear on. The same can be said of domestic issues in the UK, for which Brexit could become an unwelcome smokescreen.
Conflicts of interest also demand attention. The election of Donald Trump in the United States presents a challenge to the EU and UK too. While the UK must seek to court US business without ceding too much control of its standards or sovereignty, the EU will seek to check his influence, and that of US corporate overreach.
For all the inevitable bumps in the road to Brexit, the intent behind the negotiations will at least be cordial. Next to dealing with the Philippines’ Rodrigo Duterte, sparring with Russia or keeping tabs on North Korea, two years of paperwork and bickering should be a walk in the park.
Boosts to acquisitions and exports
One of the most immediate and lasting effects of Brexit has been on the value of the UK’s currency. The Pound Sterling fell sharply when the news came in, and has stayed low ever since. While this cannot be taken as a positive for everyone, it does yield benefits to certain kinds of business.
UK based businesses which benefit from sales in foreign currencies are already seeing a steady uptick in income. Meanwhile foreign businesses who are already in the UK or looking to set up there can suddenly make much cheaper acquisitions. With consumer spending holding strong in the world’s fourth largest market, this stands to bolster the UK economy.
This will particularly benefit companies whose products or services will benefit an international portfolio, such as technology startups, a growing area of UK industry. And the clout provided by larger businesses may make it easier to hire skilled staff from abroad, helping mitigate the loss of some EU labour.
There are developments elsewhere too: Chinese universities have already taken the opportunity to set up campuses in the UK, with Peking University spending £9m on a stately home in Oxford. Any boost to education is a potential boost to available skilled labour, a crucial factor in the post-Brexit economy.
Benefits of regulatory changes
One of the flag bearers for the positive effects of leaving the EU was the fishing industry, which had been hit by strict quotas. But numerous areas of British industry could potentially benefit from the easing of certain restrictions, as well as creative solutions to new challenges.
The uncertainty over EU labour has already caused shortages in certain areas. In the long term however, the balancing of EU and non-EU immigration could be a huge positive. Technology and manufacturing companies could benefit from additional STEM trained staff, with the best talent often found in the United States and Asia. Limitations meanwhile may mean better training opportunities and a refocusing of education, supporting these industries for years to come.
The oft cited red tape levied on small businesses could be cut as the UK regains sovereignty over a suite of laws. And the other major benefit, trade deals, could dramatically alter the British business landscape. Deals such as the TTIP which took years to negotiate (and now looks to be void) would be far easier to negotiate with a single nation, as opposed to a block of countries.
Such deals could improve exports to new markets, making it easier to enter established and developing regions. A good example would be South America, where the UK had already begun to shift focus with business delegations at the time of the Rio Olympics. The blanket repeal and reappraisal of laws could usher in a wave of new relationships with global trading partners.
As the founder of Open A European Company.com and Start An American Company.com, Heather Landau has honed her skills in service advisory from the pragmatic to the practical. With a total of 25 years combined experience in international marketing and business development, Heather is a leading voice on company formation in Europe, and operates similar services across the rest of the world.