IoD: advice for businesses on how to respond to Brexit
The Institute of Directors has released a paper outlining a wide-ranging assessment of what Brexit means for British business.
The IoD suggests it is most likely the UK will retain access to the single market for goods with some concessions, but the real concern is what the prospects are for services, which account for a significant part of the economy.
On June 23 the British public voted in favour of leaving the European Union, a move which saw Prime Minister David Cameron resign.
The report suggests:
- It is imperative for businesses to begin conversations with EU clients and supply chain now, in order to clarify what these changes will mean for businesses
- Eighty-three per cent of IoD members have some link with Europe, whether via export, import, supply chain, staff or otherwise
- The UK is unlikely to be able to deal with new trade partners whilst re-negotiating with the European Union and amending existing third-party arrangements
- Passporting for financial services has been one of the most significant advantages of the single market for UK firms. Negotiating this will be difficult as remaining EU members will see this as an opportunity to shift business to European cities, unless the UK opts for the potentially politically-difficult EEA model
- On immigration, the IoD expects EU nationals living here to be able to stay once we have left the European Union, but would again call on politicians to clarify this status as soon as possible
In the immediate aftermath of the referendum vote, IoD members considered the key priorities for the Government to be:
- Take steps to stabilise the economy in the face of any negative reaction in financial markets
- Securing a new trade agreement with the European Union
- Prioritise new UK trade agreements with high growth markets and ensure preferential market access to third countries (via existing EU trade deals) is maintained
- Clarifying the status of EU citizens in the UK, and UK citizens elsewhere in the EU.
Simon Walker, Director General at the Institute of Directors, says: “In the wake of the EU referendum vote, we now need politicians to respond coherently to provide stability as we work out our future path. We must not lose faith in the ability of British businesses to overcome these challenges.
“The IoD is resolutely positive about the opportunities that globalisation brings. We were promised an open and outward looking country after Brexit. Whoever ends up in charge must deliver on that pledge – a Britain that continues to play an outsized, global role in a world that is coming together, not moving apart.”
Allie Renison, Head of Europe and Trade Policy at the Institute of Directors and author of the report, added: “In the wake of the referendum, the most pressing concerns for businesses are responding to the short-term consequences stemming from disruption to financial markets and preparing for longer-term ramifications and maximising any opportunities that a post-Brexit landscape stands to offer.
“With such a high degree of integration into EU markets, businesses need to consider the possible outcomes of negotiations and whether we have access to the single market. There are a number of areas outlined in this report where we can forecast a range of potential changes to policy that firms should take into account when making any adjustment plans in the wake of Brexit with both short and longer-term perspectives in mind.”
Read the July EURO 2016 issue of Business Review Europe magazine.
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