Politicians, business leaders, commentators and academics gathered in London in early April to discuss what we can expect from Brexit, now that the UK has triggered Article 50. Here are seven things we learnt at the summit:
- Business wants to sort questions around workforce as a top priority
Safeguarding the rights of EU citizens in the UK – and vice versa – was a recurring theme throughout the summit. Most companies not only want to secure their current EU workforce, but to continue, if possible, to have access to a large pool of talent right on the doorstep. There’s plenty of practical action they themselves can take, as we argued in a recent Brexit Column.
- The window for negotiations is surprisingly small
There are likely to be fewer than 100 days of direct face-to-face talks due to elections in the UK and Europe at the start, and a significant ratification window at the end. In that period, the two sides have to discuss up to 20 negotiation areas, ranging from citizens’ rights to sector-by-sector deals. Companies need to start planning immediately, using something like the KPMG Brexit Navigator.
- Business wants an early deal but also needs to make its voice heard
Businesses are eager to see an early agreement on a transition phase, giving them the certainty they and their investors need to plan ahead. Yet, companies will not sit by and wait for a political settlement: the longer it takes for the direction of talks to become clear, the greater the risk that the UK loses out on jobs and investment.
Business also has a responsibility, however: companies need to be actively lobbying policymakers on both sides of negotiations – directly and via national and pan-European groupings – to spell out the dangers of a cliff-edge Brexit and the importance of an orderly transition. Now that Article 50 has been triggered, European governments may be more open to discussing Brexit-related issues.
- The fragmentation of financial markets will ramp up costs and inefficiencies
No one European country would emerge as the winner if financial services provision had to leave London, agreed panellists from across the Continent. KPMG’s partner, Brexit banking and capital markets lead Joe Cassidy, pointed out fragmentation would only increase costs and inefficiencies, although more competitively-priced countries could benefit from a larger slice of back-office work. Any new system should reflect the needs of corporate clients, for example, whether euro-denominated trades can continue to be processed in the UK.
- There are plenty of new growth opportunities for pragmatic, nimble businesses
Brexit represents an exciting platform for businesses to rethink and recast their futures. Those who get themselves BrextFit at the earliest opportunity will emerge as the winners in the new landscape: companies with a practical mindset, who engage early with the challenges Brexit poses and who discover creative solutions will be the most successful. No-regrets planning to mitigate any negative effects will provide long-term stability and offer a boost if the UK and EU conclude a free trade agreement.
- Britain has untapped potential as a trading nation
Only 11% of UK businesses currently export goods or services and, cumulatively, they generate just 28% of GDP - the lowest rate of any EU member state. The UK will only achieve its goal to have an extra 100,000 businesses exporting by 2020 if companies focus on the intrinsic appeal of their products and services, rather than competing just on transitory factors such as exchange rates.
- “You can’t marry again while you’re getting divorced, but you can have ‘friends’ ”
Why wait, asks Dr Kegang Wu of the China Guangdong Economic and Trade Office. The UK has every incentive to start informally scoping out free trade deals right now with China, the US, India and other markets, he pointed out. He added his prediction that China would sign a free trade agreement with the UK within five years. The earlier companies prepare for the possibility of doing business with those markets, the better!