Brexit: reasons to be cheerful (or fearful)
Matthew Gwyther reports on the second in a new season of Ahead of the Curves discussions, curated by Jericho on behalf of Stifel Europe and CEO, Eithne O’Leary. Having tackled the future of the professions and the social impact of Big Tech. in seasons one and two, the latest series turns its attention to the “double-wicked” challenge of COVID and Brexit… and what happens next.
The post-decree absolute phase of any divorce is a raw and testing time. The sunlit uplands of sovereign singlehood seem a world away over the horizon. Both parties – exhausted by the rancorous and drawn-out end of marriage negotiations – are on edge, tetchily awaiting either party to commit a breach of the final separation rules. Children returned ten minutes late after a weekend with dad cause a nasty row on the doorstep. Maintenance payments – there was no “clean break” nor ever a hope of one – are late. Who takes the children for their MMR vaccinations? (Indeed, who gets vaccinated first?)
Thus is it with Brexit. Things are currently deeply unsettled and would be dominating the daily headlines were COVID, not uppermost – perhaps even to the relief of the UK government – in the minds of the public. The question is whether new ways of co-existing are merely teething problems or a whole new permanent modus operandi that will disadvantage us economically for some time to come. Then there is the question of how the divorced couple is perceived by friends and neighbours. The rest of the world regards Brexit with a mixture of bafflement and indifference if we are to believe the last Jericho/Stifel podcast. It is other people’s domestic grief. But as Sylvain Fort, an advisor to Emmanuel Macron, when interviewed in that programme noted, we Brits have crache-ed [spat] dans la soupe, an act with undeniable consequences. We’ve done something unspeakable in the marital bed, if you like.
We Brits have crache-ed [spat] dans la soupe, an act with undeniable consequences.
In our – the UK’s case – there is a risk that friends of the ex-family regard us askance. As the troublesome, guilty party. (Even the UK’s own siblings are disowning their wayward brother as the 314-year-old Union is now threatened by an independent Scotland and a re-unified Ireland.) Like a bolshy ex-husband swiping around fretfully on Hinge or Tindr for new companions, we swing a trade deal with the lissom North Macedonia. Indeed, how we are regarded by The Talent – in the HR rather than amorous sense – is critical and took up a substantial part of the latest Stifel roundtable discussion. The UK over the last 30 years has excelled in bringing the bright and endeavour-filled to these shores to do far more than barista-duties. Now we hear the population may have shrunk in London by as many as 700,000 foreign-born residents since the COVID outbreak. People are returning home and bank jobs are moving to Paris, New York…Frankfurt even. Defiant companionship is there for the divorced husband, if he wants it. Who better than John Redwood, his old mate at the golf club bar – who never liked the divorcee’s wife one little bit and was never circumspect about the fact? “Chin up. You made a mistake. Plenty of skirt out there for a guy like you.”
Last week Sir John Tweeted: “The EU’s threats to trade in vaccines is a warning to us. We need to increase our own ability to make and grow things at home, not rely on too many EU imports.” Never mind parmigiano, cavolo nero, foie gras or even guacamole/mushy peas, sow some wild oats in your own allotment is the message. Dig for Victory. Meanwhile out in the real world, and away from perishable foodstuffs, The Sheffield Star reported on the plight of Buxton Special Alloys in Rotherham which is a stockholder of stainless steel, duplex, super duplex and nickel alloys. Director Nick Buxton, said, “This is causing us massive issues with material stuck at customs that is delayed due to them not understanding the new paperwork. We lost three customers since we came back after the new year because the material was delayed 10 days in customs. The country is a shamble yet there’s been no thought for the impact it has on us. Maybe it will only be short term but what is short term? Brexit took four years!”
“Leaving politics and ideology aside it’s important to look at the practical consequences of where we are now.”
With this as a background, Jericho Chambers convened its first roundtable discussion of 2021 in mid-January. So, it is fair to say that the mood at the latest was subdued.
Eithne O’Leary, the President of Stifel Europe opened with some thoughts about her sector which has no trade agreement with Europe. “Leaving politics and ideology aside it’s important to look at the practical consequences of where we are now. As an organisation, we still wish to create jobs and wealth. And we’re getting on with it – right down to the nitty-gritty.
“There is friction at the border at the very least. Firstly, the market of 330 million that we had access to is considerably reduced and may shrink further overtime as people leave these shores. Secondly, the pool of talent may have been fundamentally changed – pulling out of the Erasmus scheme is just one example of how we’ve made it hostile for people to come here. The UK’s population has already gone down in the last two years and it may well shrink further. Thirdly, the rule of English law used to be a draw to bring people to do business here but now a combination of ideology and underfunding has the potential to lessen this vital attractiveness of the UK.”
Sanjay Patnaik, the Director of the Center on Regulation and Markets at the Brookings Institution in Washington is a close observer of Brexit. “We must first acknowledge the bad news before we can find any silver lining,” he said. “The business community hasn’t exerted its influence or power as much as it can as yet. Brexit has increased uncertainty and will continue to do so – affecting supply chains that were formerly integrated. Already £6 billion of share trading has moved into the EU from London and looking at banking and finance, more than 260 companies moved operations into the EU in the last 2 years.
“GDP and GDP growth are significantly lower due to Brexit and this is likely to stay that way. As a country, the UK must change the narrative in a number of ways. There must be a vision, a strategy getting across to the public and the rest of the world. One of the biggest issues is the loss of talent – those who have and would have continued to contribute to the economy. Moreover, formerly the UK was a preferred nation for many firms outside the EU if they wanted to enter the EU market. This will not be the case anymore.
“The recognition of qualifications across the UK and EU will be key to maintaining the economy. Companies have the money and the mobilisation power to make a change. Human capital and talent – if the UK wants to remain competitive it needs to attract the best talent and Brexit has harmed its ability to do this. Pulling out of Erasmus is a serious mistake that prevents the sharing of ideas between academic institutions, not just student movement. The perception from abroad is that the UK has become more hostile to foreigners – the UK must make sure the immigration system is open and open to both high and lower-skilled workers.
“It will be critical to see what happens with the service sector with the EU. And finally, the rule of law – from an international perspective, the UK has suffered big reputational damage from the UK government’s earlier announcements to violate international law. But there could be a silver lining: business must use its power now to get the UK back on track.”
“The recognition of qualifications across the UK and EU will be key to maintaining the economy”
Not all agreed that the UK business was supine during the referendum debate. Lesley Smith, Vice President of Corporate Communications & Public Affairs at Revolut worked previously at Amazon. “Business did speak up a lot privately during Brexit, but the government couldn’t deliver,” she said. “So, people became cautious and a bit sceptical about the value of saying anything. It was also difficult to take a public stance if you had a big workforce who would encompass all views. The ship has sailed for most businesses and they have to get on with Brexit and COVID. But COVID has shown that talent is globally accessible remotely. London is still hugely attractive as a location but it changes how we should view employment in the future.”
Chi Onwurah MP, Shadow Minister for Science, Research & Digital said that the Conservative Government had let down the business. On the Brexit vote, she said that the lived experiences of many did not chime with Europe’s supposed benefits for all too many and there was not the shared experience needed to make the European Union meaningful for them. The Brexit deal will lead too many small businesses closing but the Brexit champions will find scapegoats other than themselves.
Sanjay interjected, “There is currently no party in the UK that really represents the interests of the broader business community since Brexit is hugely detrimental to most British businesses and the broader UK economy. Moreover, Labour has been unable to consolidate the Remainers, which is a lost opportunity.” But Chi responded, “I don’t think now we are or should be ‘the party of Remainers’, we are the party who wants the best for all British people and what is best for all of us. We need to have a vision for our future beyond the current economic structures and crisis.”
Baroness Denise Kingsmill, a Labour peer commented, “I want the opposition to start being the opposition – we’ve got to find a way of communicating our vision and we’re not doing that at the moment. At the same time, the UK has to change its attitude to the rest of the world and drop its sense of superiority.”
Her fellow peer Patience Wheatcroft, a lifelong Conservative but now unaffiliated, said “The political reality is that we have a government that has succeeded in allowing COVID and the vaccine roll-out to cover the issues of Brexit. They won the election with no fundamental view, beyond quitting the EU, of what they wanted to do once they got power. We need an agenda about fairness and Labour is in a position to start articulating that. Business won’t lead on this any more than it spoke out against Brexit. Far too many different businesses are intent on staying on the right side of government. So, it is incumbent on those of us who see Brexit not working to callout the failings and work to win improvements.”
“The silver lining of COVID is that it has made everyone recognise that the use of tech can transform what we are able to do and how we do it.”
Lama Zaher is an outsider based in Lebanon who has worked with the UK government and has admired its use of soft power in her region. She noted that “The silver lining of COVID is that it has made everyone recognise that the use of tech can transform what we are able to do and how we do it. In Lebanon the rhetoric and challenges are completely different – we have citizens that do not have access to basic services. Will the support from the UK stop because of Brexit? Will the EU development agenda remain in the UK’s priorities? There are other parts of the world that should still concern you.”
A need for a cold and sober appraisal of the facts was acknowledged to be in order. “Experts and business have been too timid to push back against populism,” said Sanjay.
Vicky Pryce agreed: “We need to consider the facts and what is really going on and where we need to intervene. But there is no serious industrial policy in place. Brexit is a long-term problem and much bigger than COVID. The Greeks are asking what are you guys doing – why are you behaving the way you are? Why do you want to put yourself through hell? If we ignore the issues that exist as a result of us now being a third country, it’s a real worry.”
Jane McCormick was formerly the global head of tax at KPMG but now free from the burdens of that role: “I’m one of those business people who has been trying to get the government to listen but they didn’t,” she said ruefully. “Lots of countries are facing similar challenges to us but we continuously wash our dirty linen in public and bring into reality the things we fear. We must lose our sense of exceptionalism. We’re not that special – neither the best nor a basket case worst. But we must not talk ourselves out of a future. Become more ‘business-like’ would be my entreaty.”
Wendy Jephson, the Head of Behavioural Science, Market Technology at Nasdaq agreed: “We don’t do ourselves any favours in talking ourselves down about how we have dealt with the evolving circumstances we find ourselves in – we could instead look at how fast we’re learning and responding. Predictability is suggested to be a necessary element we must get back but the world is moving too fast now to expect this and COVID has helped us all be open to trying new things. The challenges that are raised by Brexit will have a range of people looking at how to solve them, for many there is simply no choice but to act because of the hardships new restrictions are bringing – this kind of motivator will encourage people to develop ways to tackle these things. The democratising of tech allows people to just have a go and we will see new solutions emerging. The government will always be behind the curve of people who are out there solving the problems. A question for us is how do we leverage the global network that we have to take the opportunities that present themselves?”
The BBC’s Stephen Sackur who has lived in countries across the globe was trying to be sanguine: “I just want our political class to get over tub-thumping nationalism which is helping no one. I’m optimistic that we can change the tone. We are going to have to focus very hard on young people in a Brexit and COVID economy. Look at Northern Ireland and how the people are being offered an Irish passport. The last thing we want is to lose our kids.”
“Brexit is a long-term problem and much bigger than COVID”
“Think of the children!” is the entreaty given to most couples when divorcing. Well, the children don’t appear to think much of their parents i.e their elected representatives when dealing with that other crisis, COVID. Two days after this roundtable IPSOS Mori announced that according to their research more people thought Marcus Rashford and even Piers Morgan were doing a better job dealing with the pandemic than the government or the opposition. But we cannot, of course, choose our parents….
This roundtable and podcast series is part of Jericho’s The Double-Wicked Challenge; COVID and Brexit programme, generously supported by Stifel Europe.
Participants in the Roundtable included:
1. Claer Barrett, Consumer Editor, FT
2. Sylvain Fort, Avisa Partners
3. Matthew Gwyther, Partner, Jericho Chambers
4. Wendy Jephson, Head of Behavioral Science, Market Technology Nasdaq
5. Denise Kingsmill, Former Chair, Monzo
6. Jane McCormick, Former Head of Global Tax, KPMG
7. Simon McDougall, Deputy Commissioner, Regulatory Innovation and Technology ICO
8. Eithne O’Leary, CEO, Stifel Europe
9. Chi Onwurah MP, Shadow Minister for Science, Research & Digital
10. Sanjay Patnaik, Director Center on Regulation and Markets, Brookings Institution
11. Robert Phillips, Founder, Jericho Chambers
12. Vicky Pryce, Economist and Business Consultant, Board Member Cebr
13. Stephen Sackur, Presenter, HARDTalk
14. David Schick, Vice Chairman, Stifel US
15. Lesley Smith, Vice President of Corporate Communications & Public Affairs, Revolut
16. Ruth Sunderland, Business Editor, The Daily Mail
17. Baroness Wheatcroft, Member House of Lords
18. Lama Zaher, Managing Partner, Beyond Innovation and Technology – Bit