On 17 January, Theresa May outlined the UK government’s plans for their European Union (EU) exit, but what does this actually mean for British businesses?
Here are five things businesses should know about the UK’s Brexit negotiation stance.
No single market membership
Probably the most controversial aspect of May’s negotiation plan–although not unexpected–was the announcement that she intended to break from the EU’s single market, therefore invoking a ‘hard Brexit’.
For UK businesses the outcome of this particular negotiation will be key for the future of their economic prosperity.
A free trade agreement would be the ideal scenario, allowing British companies to export and import freely, with few barriers. However, European leaders are not likely to cave easily and will call for a certain amount of reciprocity.
This being said, May was adamant that she would rather have “no deal” for the UK than a bad deal. If the EU close their doors on UK trade, she said, they’ll be putting up barriers to trade with one of the largest economies in the world, destabilising supply chains and international businesses.
The UK, on the other hand, would still be free to forge new trade deals with other global powers. US president Donald Trump said that the UK are at the front of the line when it comes to trade negotiations with the US.
The quantity of investment coming from China and Asia should also inspire confidence. May remained self-assured that EU leaders would not allow European traders to become poorer just to teach Britain a lesson.
For businesses, this means less EU regulation on UK goods and services which, while allowing greater freedom, may also affect supply chains.
The UK government must ensure that laws and regulations safeguarding goods, services and industry are enshrined in British law before the UK leaves. This includes the rights of workers from both, domestic and international origins.
A controversial issue, immigration control was a topic which many voters, for and against, were awaiting a verdict on.
May acknowledged the grievances held by many Leave voters, that the free movement of people across EU member states, including immigration into the UK, can put pressure on our domestic infrastructure.
It can negatively impact public services, cause wages to fall and taxes to rise in order to support the influx of people.
She understood that there is a need to better regulate immigration, further cementing the plan to leave the single market, as membership would require free movement of people between EU member states.
This is not to say that May did not outline the benefits immigration brings. Our international allies bring innovation, they fill gaps in lower-skilled employment and they bring diversity, all attributes which make the UK economy vibrant and strong.
By controlling immigration and leaving the EU, May believes that we are opening up the door to our global neighbours, increasing our access to skills, innovation and cultural diversity, not reducing it.
For businesses this means a more varied labour market, making us more attractive to foreign nationals from outside the EU, not less, whilst also allowing us to our protect national interests.
As mentioned above, May believes that, by leaving the single market, we are opening the UK up to a more globally successful future. In her speech, she said:
“I want us to be a truly global Britain… a great global trading nation respected around the world.”
This confidence in new trade ties being established is not unfounded. We have a history of global business success, often going further than our European counterparts when it comes to international relations.
Leaving the EU would allow the UK to “get out into the wider world”. It means that 23 July will not be remembered as the day the UK ‘chose to retreat from the international stage, it was the day it decided to build a global alliance’, allowing us to take advantage of a greater wealth of opportunities.
The opportunities an increased global marketplace would give to businesses seem, in theory, extremely profitable.
By separating ourselves from EU regulation, there lies a possibility for growth and expansion beyond our neighbouring continent.
However, this all depends on how willing European leaders are to negotiate leading to the final objective British businesses should be aware of.
Co-operation, not alienation
For businesses, we can only hope that the new industrial strategy May’s government will put in place will help to support this period of change, encouraging the uptake of new opportunities and inspiring optimism in a new global future.
May praised British business at the end of her speech stating that no one was calling to reverse the result but they are simply planning for the future.
It is this ‘Keep Calm and Carry On’ mentality that the British are famous for and it could not be more relevant here.
Ultimately, the only way these negotiations are going to succeed is if the country unites and allows the process to play out.
May urged patience and made it clear that she will not be “filling column inches”, providing a daily summary, but will share negotiation proceedings as and when it is in the national interest to do so.
We are under no illusion that the next few years will be tough and uncertain. However, it is down to us, as a nation of small and medium-sized businesses, to make the most of the opportunities we are presented with and look forward to a global future.
About the author
Phil Foster, Managing Director of Business Energy Comparison site, Love Energy Savings.