The FT & KPMG Brexit Regional Roundtable series brings together the views of senior leaders from the worlds of business, politics and academia to discuss how they can practically respond to the challenges and opportunities of Brexit.
KPMG has been meeting with organisations around the UK to assess how they are responding to Brexit in a series of dinners, hosted jointly with the Financial Times. Here are a few of the interesting things we heard in London:
1. Leaders are focussed on talent and skills
The number one challenge for many London firms is maintaining the availability of skills and talent. Soft evidence is emerging that it is becoming tougher to recruit new people from overseas because of uncertainty around immigration. However, so far, there have been few reports of staff returning home because of the uncertainty over their future residency status. Leaders are keen for the government to clarify its position on workers and to make an intelligent argument around the need for migrant labour in the long term.
They also recognise the importance of skills development and are working to retrain people so they are ready for the jobs of the future. They want to build on the UK’s reputation as a leader in digital technology, to ensure its position becomes even stronger. In addition, they want to play a role alongside schools and parents in encouraging the workers of the future by promoting STEM – science technology, engineering and maths – subjects.
2. Decline of sterling has mixed impact on London’s leaders
While the tourism sector and major retail firms that are magnets for international visitors have benefitted from increased spending as a result of a lower pound, firms that rely on imports from other parts of the world have seen their costs rise.
3. Leaders are concerned about uncertainty
Although the UK is still a popular investment choice, firms say investor uncertainty is making it harder to raise money, which is particularly tough for start-ups. Leaders from the retail sector and other sectors that rely on discretionary spending, are concerned consumer confidence will be affected as Brexit plans become clearer and that this could impact their business.
4. Businesses want greater partnerships
London businesses believe that Brexit is too important to leave to the politicians and firms need to speak up to ensure their voices are heard. They are keen for alliances to be forged with other major European cities, such as Paris, Berlin and Madrid. They also want London to work with other major cities in this country as part of a wider integrated UK economy. For example, two-thirds of all City jobs are actually outside London and tourists who come to the capital will often visit other parts of the UK as well.
5. Business leaders want to change the narrative
Leaders are concerned that business is seen as the villain while the population is seen as the victim. Extending the villain/victim narrative internationally, they are worried the UK is also taking on the villain’s role because of the headlines it is provoking. There is a desire for the government to adopt a more conciliatory tone in Brexit negotiations to achieve the best outcome. There are also calls to change the way businesses are perceived and for leaders to stand up and be counted during the Brexit negotiations.
6. Leaders want clarity around tariff and non-tariff barriers
Business leaders in London are concerned about the potential impact of tariff and non-tariff barriers on their supply chains, particularly if the UK moves to World Trade Organisation (WTO) rules. Such barriers could introduce additional costs or affect their productivity. Although some chiefs think this option will ensure a level playing field, with competing firms facing the same challenges, any extra costs will be passed on to the customer and feed inflation.
7. Contingency plans are underway
Many London firms are implementing contingency plans to deal with Brexit. One entrepreneur is considering how they will navigate Europe and is interested in the creation of a hub where everyone can access what they need to make a success of running their business in the EU. The head of a firm from the financial sector that has seen its EU business grow since it was awarded passporting rights in 2010, reports it already has contingency plans and intends to continue to grow in Europe.
8. London leaders are naturally optimistic
Leaders point to the natural optimism of business and believe the good firms will find new opportunities whatever the circumstances. A retail chief reports it is excited about the UK continuing to be seen as a cheap place to visit, attractive to tourists and potentially a tax-free market. Another head says their firm is optimistic about potential opportunities with government procurement.