Increasingly, businesses seem to be adopting a pragmatic approach to the uncertainty of Brexit surrounding them.
Over the past couple of weeks, I’ve noticed two new camps emerge from the Brexit debate. I am not talking about remainers and leavers, optimists and pessimists or other political factions. The new division I see is between “watchers” and “doers”. Fortunately, among the business leaders I’ve been meeting recently, an increasing proportion fall into the latter category.
The idea lodged firmly in my mind this week at the FT Brexit and Beyond Summit, which KPMG were sponsoring. Politicians including former deputy prime minister Nick Clegg and Hilary Benn, chairman of parliament’s Brexit select committee, made important arguments about the possible outcome of talks and what needed to be done. FT editors and correspondents assessed the task ahead and the risks that talks could fall apart. It is the vital role of these people to both analyse and help shape the bigger picture, as business must also do. Lobbying will be decisive in shaping the kind of Brexit we get.
But for business leaders, the immediate task is to keep the wheels of commerce turning. These people are “doers” and their pragmatism shines through. For example, Emma Jones, from Enterprise Nation, told us about her recent trade visit to Paris with a group of UK food producers. At a time when UK companies might be expected to be drawing in their horns and focusing on domestic or non-EU markets, here was a group of entrepreneurs pursuing opportunities in the face of a political gale. By all accounts they went down a storm in the French capital.
It is the kind of practical mind-set that defines the most successful enterprises. I am not suggesting anyone charges ahead, regardless of the bigger political and economic picture. But neither should we panic and freeze in the headlights. At a recent event in Manchester a client told me his company was preparing for possible tariff barriers by refining their whole production process to permanently design out costs. In other words, he is finding a work-around rather than raising his arms in surrender at circumstances beyond his control. His company is pursuing a classic strategy of ‘no regrets planning’: i.e. something they could do regardless of Brexit. Such an approach will deliver, at the very least, long-term stability and, at best, a healthy shot to the bottom line should the UK and EU conclude a free trade agreement.
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As Dr. Ruth McKernan, head of government agency Innovate UK, told the summit, businesses need to innovate, plan for all eventualities and keep their sights on new opportunities further afield, particularly if a question mark hangs over current partnerships.
Despite reassuring signs of purpose and pragmatism, businesses still find themselves in a predicament. Like nature, commerce abhors a vacuum and companies cannot, nor will not, wait around two years while a political settlement is worked out. To remain competitive and grow, they will act on any available information they have at the time to make investment decisions and, in particular to safeguard the workforce – either their current one in the UK or a future one elsewhere.
The ‘ask’ of government is therefore to show it is listening to business and, as quickly as possible, offer some indication of whether the two sides will succeed. We may get that sooner than expected. In the view of Alex Barker, the FT’s Brussels bureau chief, a signal about whether talks will succeed or fail could arrive as soon as this Christmas. That assessment is based on the idea that, if the UK were to leave the Union without a deal, the government would need the maximum time possible to avoid a disorderly cliff-edge Brexit.
We’ve heard increased noise from both sides in the last week that some sort of transition deal may be on the cards. But unless we get some firm sense of direction, my advice to business is not to “wait and see”, nor to “carry on regardless”. It is to “prepare and monitor”. As the CEO of one multi-national said, it would be impossible for his firm to be ‘Brexit ready’ at this early stage, but it is possible to get ‘BrexFit’.
The column is now on holiday for a week, back on 21 April.
Brexit: A catalyst for businesses to reset their futures.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK. You can register for the email subscription list of this column and expert views from our Brexit leaders.