Maurizio Bragagni info@bragagni.uk mauriziobragagni Dr Maurizio Bragagni MBA
BREXIT, BUSINESS AND A BETTER BRITAIN
@bragagnimaurizi mauriziobragagni
BREXIT, BUSINESS AND A BETTER BRITAIN
Designed and produced by: acumencommunications.co.uk
by Dr Maurizio Bragagni MBA
B R E X I T, B U S I N E S S AN D A B E T T E R B R I TAI N
A BUSINESS BREXIT FORECAST
We are past the turning point of the year; a good time for business people and politicians to take stock of gains, losses, what’s worked and what hasn’t and what the future holds. According to analysts there are, as ever, some very large challenges facing the British economy as it heads towards 2018. It is, after all, an environment shadowed by an event that is totally unique. What we need to understand is where on the scale Brexit sits. Is it a great big iceberg, partially hidden but potentially catastrophic if the right hand isn’t on the tiller? Is it something that will just mildly cool the economy? Or, handled correctly, is it something that is capable of delivering chills in anticipation of greater empowerment and prosperity? Britain had a very long convalescence after the crash of 2008. Its economy has been in recovery after the worst of the financial crisis and has now started to grow slowly, but steadily. Then, in June 2016, Britain jumped right back into turmoil. It voted itself out of the European Union and a political storm and commercial uncertainty followed. They say timing is everything and this perhaps wasn’t the best. So, we are not short of issues as we look toward the horizon – and a lot of them can be laid at Brexit’s door. Inflation is back, consumer spending is slowing; a result of jittery confidence emanating from uncertainty about what Brexit means. Some businesses have thrived; some remain locked into caution mode. 27
The facts are that inflation is at its highest level for almost five years and the pound has dropped against the dollar. Prices for everyday goods and services are high, people have noticed the change in the price of their weekly shop – and wages haven’t kept up. INFLATION IS LIKELY TO REMAIN A CHALLENGE AS THE BREXIT NEGOTIATIONS PROGRESS. The depreciation of sterling is raising import prices as well as slowing wage growth. Consequently, the UK economy is likely to struggle to maintain 2016’s growth patterns. UK consumers under the grip of tightening budgets will inevitably look toward more personal borrowing – and we know from experience that that is not the best for the economy. Brexit will be a long drawn out process; balancing the economy under these conditions is going to be challenging. We’ve grown used to falling interest rates. Eight million British people have never seen an interest rate rise in their adult life. That in itself is a very worrying statistic. The Bank of England has to control unsecured borrowing, minimise future risk and maintain a healthy economy – tricky to say the least. The UK’s relationship with Europe will be different. How policymakers achieve the change will shape UK economic success for generations. Brexit will inevitably have a slowing effect on the UK economy as it continues the race with its peers.
There is some light at the end of the tunnel. We may be talking challenges here, but not all of them are bad. The UK should remember that its economic life doesn’t start and finish with the EU. Trading around the world has its attractions, not least a bigger marketplace. So, negativity about the prospects for the economy isn’t helpful. Policy makers and forecasters have a duty to rein in gloomy predictions and offer a balanced view. It is true that you can talk up a downturn. The definitive vision of how Brexit will progress isn’t out there yet. A lot is talked about each side’s aims, but we really don’t know the shape of the ultimate outcome – including whether or
not Britain is definitively leaving the European Single Market. It all makes planning very difficult, but not impossible. Businesses like to plan longterm. Businesses with import interests have had to face a weaker GBP, and they’ve got on with it. However, there’s very little to inform a five or tenyear plan. We’re just going to have to recognise that this is an exceptional set of circumstances, and the most flexible will navigate it – and do well. Clarity as Brexit proceeds would be a massive advantage. Truth is though, the main negotiators are doing all of this for the first time – they are learning as they go. We are too. First published September 2017
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B R E X I T, B U S I N E S S AN D A B E T T E R B R I TAI N
EXCITEMENT AND WORRY ARE RIGHT INGREDIENTS FOR GROWN-UP SPLIT Britain and Italy’s Relationship Will Remain Strong The Prime Minister addressed delegates in
Mrs May talked about exciting times and the
While in Italy she spoke about how the two
Florence with a promise – that the UK and the
worries that follow – but isn’t that the way of the
countries are working together to tackle shared
EU would part as friends and stay friends.
world? Excitement energises and encourages
challenges - Britain’s Royal Navy, National Crime
us to look for and embrace opportunity. Worry
Agency and Border Force working alongside their
Anyone who has broken one kind of relationship
is what stops fools rushing in. Its enthusiasm’s
Italian partners stop traffickers’ exploitation of
and had hoped of replacing it with another
natural seatbelt so we should welcome a worry
immigrants and a shared fight against terrorism.
will know how difficult that is – but for some it
or two as we sit down and buckle up for the ride. The Prime Minister is right to point to some of
does work. Britain and Italy have enjoyed a cordial
the most fundamentally important areas where
She went on to talk about opening our minds to
relationship and mutually beneficial business
partner-working is paramount. Working together
new thinking and new possibilities for a shared
exchanges for longer than anyone can remember.
here, and in commerce, makes us stronger, keeps
brighter future for everyone. The reality is
We have to invest time and effort to make sure
us better informed and provides a holistic view of
that, to achieve it, everyone has to commit, and
that those solid foundations are preserved and
issues that affect both countries.
commit at the same level.
extended. Mass migration and terrorism cannot be handled Mrs May went on to express a desire for the EU
in silos. Walking away from partnership in
and the UK to thrive side-by-side. Her view is that
these areas is to condemn ourselves to failure
BREXIT may be the dissolution of a partnership
across the most sensitive and imperative
– but the process has every chance of leaving
human challenges.
behind a viable relationship nonetheless. A storm is brewing and rolling around the world. Another mass execution by a rogue gunman in America saw people mown down while they watched a music festival in Las Vegas, shoppers and café patrons were killed as they enjoyed the sunshine in Barcelona. Climate change hasn’t gone away and North Korea’s nuclear programme rages onward. It’s clear that acting together is important. The UK and Italy will stand together, as will the other countries of Europe, against challenges presented by people and planet, because together is the only way.
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B R E X I T, B U S I N E S S AN D A B E T T E R B R I TAI N
HIGHWAYS: BRITAIN’S HARD SHOULDER ECONOMY
Cables – they are the last component to be
To re-enable the cable powering traffic flow,
considered for design and build projects where
Tratos proposes:
the significant costs are typically in civil and structural engineering elements of the work.
Highways England should maintain and monitor its Type Approval mechanism to reduce its
Their role is on the rise as technology-dependant
exposure to operational failure of its technology
SMART motorway schemes proliferate.
schemes.
Cables enable electronic display signs, speed
Highways England should stop the installation
enforcement, surveillance cameras and vehicle
of non-approved cables on its highways and
sensors – the neural network that manage
motorways by prime contractors and, where
traffic flow.
breaches in its Type Approval mechanism are found, it should be the specific contractor that
Cables, purpose-designed to help keep our
`makes good’.
motorways moving are losing out to cheaper off the shelf products. Lower spec cable that is
The planned Traffic Management Technology
not designed for (and will fail in) the highways’
framework by Crown Commercial Services on
harsh operating environments is a real threat to
behalf of Highways England and others should
UK PLC, clogging arterial routes and triggering
stipulate the Type Approval mechanism and bar
economy-damaging domino delays.
procurement outside accredited framework suppliers.
Highways England, which has an imperative to cut costs, is paying more, not less, for a built-to-
Highways England should negotiate with its
fail network - but it is not to blame.
approved suppliers to maintain a call-off stock level - which is currently practiced in the railway
As it pushes forward with smart motorways, the
and electrical distribution network industries - to
organisation’s network of contractors manage on
better manage its cable inventory and improve
a supply and fit basis. Some are being cross-sold
delivery timescales.
cheaper cable when their preference is not in stock with the reassurance that the replacement
A
‘does the same thing’. That too is correct, it
first published October 2016
White
Paper
on
Smart
Motorways
–
does, but not for long in a particularly harsh environment it wasn’t designed to cope with.
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B R E X I T, B U S I N E S S AN D A B E T T E R B R I TAI N
BIG PICTURE THINKING WILL GUARANTEE JOBS AND ECONOMIC HEALTH
It’s a rare plant that flourishes in poor ground. Most
require
the
right
climate,
enough
light, water and food to grow strong. In the poorest conditions only the prickly and most unpromising survive. The same can be said of small businesses. Small businesses are the foundation for economic growth: they’re where the big businesses come from. Not every small business will survive, not every small business will grow, but making sure they have the best chance is critical. Parties’ Manifesto promises cover off greater help for businesses or, arguably, less. Some promise favourable tax rates to encourage growth, others look to bigger tax on businesses to fund other Manifesto promises. Corporation tax is a hot issue. Examining the bigger picture, it’s clear that we have to keep corporation tax low - if we subscribe to the view that low tax rates are the most important part of that ‘perfect conditions for growth’ environment. Small businesses particularly benefit from a kinder climate. Large corporations can use the UK for manufacturing but keep their profits outside the country – and of course they can leave if they want to.
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