Risk & Economy » Brexit » Flying the flag for business unity in a period of uncertainty

Flying the flag for business unity in a period of uncertainty

The business sector must make its voice heard loudly as the Brexit crisis intensifies, says Dr Sarah Jane Fox, at Royal Docks School of Business and Law, University of East London.

The EU flag symbolises a European Union based upon the principles of unity, fairness of opportunity, solidarity and harmony across a unified Union of 28-Member States. The opportunity to trade freely across open borders was not automatically written into the Treaties of Rome.

The primary purpose of the Treaty Establishing the European Community was to bring about the gradual integration of the States of Europe and to establish a common market founded on the four freedoms of movement (for goods, services, people, and capital) leading to the gradual approximation of economic policies.

The objective behind a single market was therefore to bring down barriers and simplify existing rules, thus enabling citizens in the EU to make the most of the opportunities offered to them by having direct access to the now 28 countries that form the EU.

Some might view the 2016 Brexit referendum as a positive victory for democracy and self-determination, which, somewhat ironically was the same reasoning for the reconstruction of a Europe Economic Community following World Wars I and II.  Or, conversely, others will see it a spectacular act of national self-harm, where the decision to hold a referendum was based on a political leadership battle.

This being waged some months before as part of the general election process and arguably for personal political gains, where little consideration was given to the full-consequences and fall-out to the country – whereby communities and citizens were ultimately left divided.

Either way, it could also be viewed that the result of the referendum was due to a misled public who were ill-informed as to the full consequences of voting to leave the EU; and whereby a percentage of the, then eligible, voting population had also chosen to register a protest vote. Regardless of the full reasons behind these actions, the fact remains, that the narrow majority signaled the intention for a British and Northern Ireland EU exit – Brexit was set to become a reality.

However, in the interim time, reality has perhaps also set-in; there can be no clear winners to this situation. And with an uncertain future ‘we’ ‘the public of the UK and citizens of Europe continue to question what this will mean. The decisions taken in, and by, the UK, invariably affects many, not least UK based businesses.

For, what also seems to have been forgotten by those originally voting to leave the EU is the positive contributions made by the UK to the EU and vice versa. As Professor Crafts evidenced, membership to the EU has resulted in substantial improvement to the macroeconomics of the UK.  This has seen improved trade and fairer competition, and has led to the development of a more liberalised and harmonised approach, which has further broken down barriers increasing market access for UK businesses.

This has also been achievable due to open transport opportunities throughout the EU – a provision which runs adjacent to the other identified four freedoms of movement. This physical ability to move – through open and easily accessible transport provisions across the EU – whether by road, rail, sea or air, facilitates the movement, of not only good, but services, as well as the workforce and the recipients of such.  But currently all this remains in limbo with growing concerns being voiced as to what the future will hold. How do you trade in the interim? How do you take orders and accurately price and cost provisions?

Business on alert

Only last week, Paul Venables, the CFO of the recruitment company Hays, gave his clear view as to the dangers of an unresolved Brexit.  But perhaps the possibility of a no-deal outcome – whereby we ‘crash’ out of the EU (on 12 April or whenever it may be) is by far the worse result for businesses.

It would inevitably mean that Britain and Northern Ireland would (fully) cease to have any entitlements within the EU and that all trade and movement would have to be renegotiated.  We (the UK) would be in the position of a third country. This remains not only a major risk to the economic activity of the country but to the well-being of its citizens.

Gone, would be opportunities; gone, would be open and easy access, gone, would be tariff free trading. And gone will be many UK businesses who have become reliant on trading in the EU under the current equal opportunities afforded.

How do you measure impact of a no-deal Brexit? Or even one that is less favourable than the position the UK currently realises? The simple fact is that it cannot even be predicted as this is dependent still upon what any future relation between the UK and the EU will look like. To many, this will result in life-changing consequences, which is already being reflected in peoples’ current mental health and wellbeing decline on both sides of the channel (including the ex-pats who live, work and even trade on the mainland of Europe) – who are also caught up in the turmoil of Brexit.

John Coates,  a neuroscientist, has additionally identified the fact that in periods of uncertainty people tend to be excessively more risk averse which also leads to further market deflation. And, it has certainly been evident, that since the Brexit referendum, the UK economy has underperformed with estimates ranging from a development loss of between 1.5 to 2.5%.

The truth remains that Britain has suffered from this continuing economic uncertainty and that this continues to have a significant effect on not only businesses but citizens within Britain and also across Europe. However, rewinding back to before the vote (May 2016) – the then Chancellor, George Osborne, certainly warned of this consequence, when he said; “A vote to leave would represent an immediate and profound shock to our economy.

That shock would push our economy into a recession and lead to an increase in unemployment of around 500,000….. GDP would be 3.6% smaller, average real wages would be lower, inflation higher, sterling weaker, house prices would be hit and public borrowing would rise compared with a vote to remain.” So the question invariably remains how much longer will this uncertainty last and why did people choose this gamble and risk, when warnings were clearly being given as to the consequences to businesses and the economy?


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