Best of Brexit
by James Tate, Editor of Sourcingfocus.com
Call it clean, hard, dirty or red, white and blue, Brexit means Brexit. That vague statement, used so frequently by the government in the months after the crucial referendum on Britain’s future position in the EU, is finally getting a bit of clarity. It increasingly looks as if the UK government will sacrifice the free trade agreement with the customs union to protect its borders.
This is not really what the sourcing industry wants, over 80% of Global Sourcing Association (GSA) members were supporting the remain option. This editor voted remain, but in the spirit of uniting to make the best possible Brexit (and to avoid being labelled a ‘re-moaner’) sourcingfocus will be considering what would make the best possible Brexit for the sourcing industry.
The sourcing industry has thrived thanks to a connected world with supply chains linking economies through trade. Therefore, an industry tied up so tightly with the success of globalisation, supports free trade and low tariffs. The importance of keeping good trade links with the EU is therefore paramount to Brexit negotiations, if tariffs were to creep in between the UK and the rest of Europe, UK industry would lose competitiveness on the continent.
But wait, the UK government says that by leaving the EU, we can negotiate our own trade deals with the rest of the world on our own terms, becoming a ‘global Britain’. It is probably worth pointing out that the UK economy is considered by many to be one of the most open and free in the world with lax rules on foreign takeovers and investment (Softbank of Japan bought ARM in 2016, a move that many countries would have been sceptical about).
“The UK will have to renegotiate 53 trade agreements with countries around the world, many of which we currently trade with under the terms of the EU trade agreement as part of our membership” notes Amelia Bishop of Weenie Business Solutions, a business consultancy firm for small to medium size businesses. This is a gargantuan task, especially for a country that lacks trade negotiators.
It would be best if the government worked on a transition deal with the EU and set about improving global trade links, hence lessening the initial blow of Brexit and complementing it with new deals with other economies. This means negotiation and diplomacy, something the British government is sadly short of. The hope remains that the UK government is true to the wishes of the people and negotiates the best possible trading deals it can with the EU and elsewhere” says Milan Panchmatia, Managing Partner of 4C Associates, a leading procurement consultancy.
Although trade is crucial to the sourcing in the short term, in the long-term immigration matters just as much. By closing our borders to bright, skilled and hardworking Europeans (or the great unwashed in the eyes of UKIP) the UK is losing out to more open nations. Innovation and productivity growth is greatest in areas of diverse population, such as London.
The UK desperately needs to attract professionals to its economy, thanks to a skills gap in computer technology and areas such as engineering and scientific research. Increasingly in a digital economy, these areas will provide innovation and growth, attracting investment to an economy. Robert Barbus, Operations Director of Soitron Group said “Brexit has brought upon many uncertainties, and the potential IT skills gap is a very important one.
Ultimately, it depends on what trade and immigration agreements are made between the UK and other EU countries.” Increasingly, developed nations need young workers to replace those who are leaving the work force and into retirement. Bringing up the drawbridge has serious ramifications for the future of the UK budget.
The final section of debate is regulation and investment from the EU in areas such as production, wages and scientific research. Many of the EU laws that are in place will stay after the UK leaves Brexit although the investment in science and redevelopment will inevitably go leaving the UK desperately short of innovation and training in deprived areas, look to South Wales for evidence of the support the EU gives to communities.
If we are to get the best Brexit for the sourcing industry, trade would be paramount and immigration supported, watering Brexit down to minor regulatory change, encouraging trade outside the common market and using any savings from contribution to invest in digital infrastructure and training of skills to boost the domestic employment market.
By James Tate, Editor of Sourcingfocus.com