The top 5 things your business needs to know about May’s plans for Brexit
On the 17th January 2017, Theresa May outlined the UK government’s plans for their European Union (EU) exit in, the most comprehensive speech since the decision was made to leave the EU last year.
Ahead of the speech, the Sterling hit its lowest level in three months giving some indication of the uncertainty with which these latest announcements were met. Stocks in Asia also took a hit as a result of their investment in the UK’s infrastructure.
May had already confirmed that she was planning on triggering Article 50 of the Treaty of Lisbon by the end of March this year, but very few details had been released about the kind of deal she sought to pursue. It wasn’t only the British press that awaited May’s speech, Europe held its breath too.
As expected, May dismissed the potential of a ‘partial’ exit, insisting on “a new and equal partnership – between an independent, self-governing, global Britain and our friends and allies in the EU”, but what does this actually mean for British businesses and what lies behind the idealistic patriotic patter?
Here are the top 5 things your business needs to know about the UK’s Brexit negotiation stance:
1) 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 ‘hard Brexit’.
In layman’s terms, an exit from the single market means that the UK will no longer have the right to the free movement of goods, services and people within the EU. It also requires us to leave the EU Customs Union. However, in her speech, May did clarify that one of her main objectives was to negotiate a free trade agreement that will keep borders open to UK/EU trade. This, she insists, would benefit both parties.
May was quick to address Europe, stating that the UK wished to become a good friend and ally to the European Union, working with each other to ensure a prosperous future, opening borders instead of closing them.
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.
President-elect, Donald Trump, has already come out and said that the UK are at the front of the line when it comes to trade negotiations with the US and 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.
2) Parliamentary sovereignty
May understood that one of the key reasons that the UK public voted to leave the European Union, was the belief that our laws and democracy were being threatened by a supranational organisation that could not be held to direct public account.
The UK is atypical among our European neighbours, having an unwritten constitution, and therefore not having one, single unifying legal document which outlines the fundamental laws dictating how a state is run. In the UK, we therefore rely on Acts of Parliament, custom and precedent to entrench our Parliament’s sovereignty.
She noted that, in order to build a stronger Britain, the UK must regain control of our courts and laws, rejecting the jurisdiction of the European Court of Justice.
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, negatively impacting public services, causing 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.
4) Global expansion
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” meaning that the 23rd 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.
5) Co-operation not alienation
Throughout her speech, May kept repeating that she desired co-operation and friendship with Europe, not alienation or rivalry.
She kept calling members of the EU our allies, and voiced the desire to see the Union flourish and strengthen in our absence, not deteriorate. Right at the start of her statement she mentioned that uniformity and a lack of flexibility were to blame for the UK’s decision to exit. She urged the Union to reform practices, to accept diversity in order to survive and evolve.
The UK’s decision to leave was not a result of dis-aligned values, it was simply a desire to restore democratic sovereignty, it should therefore not come at the expense of the potential for a mutually beneficial alliance. She recognised that compromises would have to be made, but that is a key part of any negotiation process.
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, but 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.
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