By Catherine Birkett, CFO, GoCardless
Brexit is here. Sort of. Ever since the 2016 vote to leave, business leaders have been stuck. Prime ministers have come and gone. Second referendums have been mooted. Draft deals have been rejected, redrawn and rejected again. And again. Frankly, it’s been a mess.
Now Johnson has a clear Brexit mandate and a significant parliamentary majority to deliver it, my ‘to do list’ of no-deal contingencies and three-month forecasts can move on. My 2020 version is a welcome return to two-year timelines and planning for sustainable growth. It’s back to business as usual. Almost. We aren’t out of the Brexit woods yet. Johnson may have won on a “Get Brexit Done” promise, but the hard work is still to come.
Whatever your view on leaving, the reduction in uncertainty is helpful. We see a path – not clear yet, but perhaps clear enough so we can plan with a degree of confidence. Johnson has promised to take Britain out by 31 January. By the end of the year, he says, deals will be ready, allowing businesses to continue trading goods and services with the Continent and beyond.
Business seems to like it. After years of the UK’s economic growth limping along, confidence is finally returning 1]. But I’m leaving the no-deal plans on my desk – under the mug of tea – just in case. Until the ink is dry on the final trade agreements, they must stay.
Big deals aren’t easy. And this one’s huge. In business, I’ve known contracts with one vendor take six months to broker. The UK now has a little under twice that time to negotiate individual contracts with all our trading partners, worldwide. To borrow that meerkat phrase that one of Brexit’s prime-ministerial casualties herself famously appropriated, “Simples” it isn’t.
So far we have 19 EU agreements, covering 50 countries, with 22 left on the table. Critical though ‘business as usual’ with our closest trading partners will be, these deals are only part of the picture. Last year, trade with the EU generated £654bn for the UK economy. The rest of the world combined contributed £677.8bn. Preserving the latter will rely on new agreements with the likes of the US, China and India to be written from scratch. Certainty? What certainty!
The deals we do in Europe will also partly dictate the terms of our agreements with these other nations. A bad deal in Europe would weaken our negotiating hand elsewhere. It’s going to be a fine balancing act. The UK shouldn’t look too far, too soon beyond Europe; but neither can we afford to wait to nail that down before we start the ball rolling further afield.
Trade negotiators had better get their suitcases down from the loft and make arrangements for watering the plants.
The new Brexit priorities for business
A priority for technology companies like GoCardless is to passport our licences so we can continue trading with the EU without tariffs. We need an agreement that will insulate the financial services and technology sectors – that are not exporting a physical product – from Brexit fallout.
It should be a priority for both sides. The digital economy is the future for Europe, and the EU needs London as much as we need it.
Business also needs clarity on immigration, quickly. Fast-growing companies like ours rely on being able to hire skilled workers from all over the world. Our workforce comprises nearly 40 nationalities, with half of the countries represented outside the EU. It’s a typical picture for a tech business of our years. Understandably, these people need to plan for their future. And so do we.
But a focus on an effective immigration policy must go hand-in-hand with developing homegrown skills and the infrastructure that allows people to move around the country.
I grew up in a Yorkshire coal town. I’m from a long line of coal miners. Back then, having a different ambition meant moving south. It’s got better. When I was CFO of the telecommunications company Interoute, we opened an office in Nottingham. It was fantastic. I saw first-hand the abundance of talent just waiting there.
But it’s not nearly enough. Business needs both immigration and genuine social mobility; not the narrative that it’s an either/or. Whatever else Brexit does, it must not overshadow business’ enduring need to be able to attract and develop the best talent, wherever they are from.
I am an optimist. I can’t imagine how you can be the CFO of a scale-up business like GoCardless without having a good dollop of it. Frustrating though the uncertainty of the last years have been, we never let it stop us. We secured a banking licence in France, so we can continue to serve our EU customers whatever may occur; and we entered the US market, ready for when (if) our UK customers want to take advantage of a new transatlantic trade deal. We planned more, we hedged more, but ultimately we’ve done what we set out to do. I know many other CFOs who will reflect on this period in the same way.
There’s no doubt that Brexit – when it comes and whatever form it comes in – will have a significant impact on business. But the only approach to take is optimism; and a hope that the pragmatism and common sense that businesses have been employing so far will also prevail across the political negotiating tables.
In fact, we can do more than just hope. It is incumbent on us, as business leaders, to keep the pressure on the government and on the media to maintain the momentum of new trade deals and keep us informed.
It has been too easy to get distracted by Brexit. The danger now is that we aren’t distracted enough! We need to remember that Brexit hasn’t happened. Business must keep the pressure on the politicians. Tell us clearly the way things are going. Warn us of changes. Make it as easy as possible for us to do business abroad.