System renewal. Challenging established notions. Reimagining our societies.

How to stop Brexit? Understand the looming disaster for business

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There is a lot of smoke surrounding the prospect of a no-deal on 31 October. The bookies’ odds are shortening for a no-deal exit. But I still have faith that MPs in our government won’t let a no-deal go through. How they do that (through a no confidence vote, or forming a new government of national unity), who knows?

With Parliament on holiday, no one is really saying what they are going to do, including Boris. According to the Fixed Term Parliament Act, Boris would need Corbyn to agree to call a general election anyway because they need two thirds of parliaments to agree to it. 

Whatever the method to rerail Brexit, what is clear is that Britain’s fate lies with MPs of different parties to form an alliance and work together. One step we can all make is to convince our own MPs what a disaster a no-deal would be.

As an entrepreneur before turning to politics, my biggest argument against Brexit has always been the negative effect it will have on business. Business provides employment and taxes. It is thanks to being part of a market five times larger than the UK, that I was able to rise above my competitors and build a $1 billion sales in five years.

Like many business owners, I started small. I began selling air tickets from a kiosk in Earls Court station and gradually I grew. My company became ebookers.com, operating in 11 countries which I sold in 2005.

If I were in business now, facing Brexit, I would have set up an office in the EU by now, so I could continue to market myself to the other 447 million people outside of the UK. The UK has a market of 65 million, Europe has a market of 512 million. Why would I give up the larger market?

Say if I employed 100 people. With the status quo, I could have all of these based in one  central location anywhere in the UK and do business with Europe. But in a post-Brexit world I would have to move 80 per cent of them to the EU.

Like many compassionate employers I might offer them the chance to keep their jobs and relocate. But most employees don’t want to that, especially if they have families. So I’d have to give those jobs to Europeans and the UK would be a net loser.

This is what any functioning business will do, or already has. Panasonic, Sony and Muji are just some of the big names that have moved their European HQ from London to other European cities.

Many Brexiteers say that only applies to large businesses and that nothing will change for small businesses. Well, I started off as a small business. I supplied medium businesses. So as medium and large businesses move abroad, there will be less custom for the small ones.

Another thing I noted when doing business with different European countries, is that over the year, quiet periods in one region balance out busy ones in another. For example, in the travel industry, many northern Europeans buy early in the year ahead of the summer holiday season. The Mediterranean regions are more last-minute. These trends in consumer behaviour help to smooth cash flow and the same will be the case in other sectors such as food or fashion.

Then there’s the other advantage that as a business with access to 27 different markets, you can always source the cheapest wholesale goods. In the travel sector, we found that buying a ticket directly from an airline in Switzerland would be more expensive than if you bought the same ticket in say, Italy. In other words, I could get the best deals for my customers simply because I had access to more markets.

Brexiteers say that all this doesn’t matter because we will negotiate our own favorable trade deals outside of the EU. But this is simply not true. Shortly after the referendum in June 2016, then trade secretary Liam Fox predicted we would make 40 new trade deals over a cup of tea, only to realise he couldn’t even start while we were still part of the EU. Trade deals take 6-10 years to agree because they are extremely complex. Even special WTO terms take 6-8 years. Trade deals are extremely complex.

No trading partner is going to welcome us with open arms anyway. We are in a weak position. Currently we negotiate as part of a $19 trillion economy. As lone wolves, outside the EU, we become a $3 trillion economy.

Trade is largely dictated by geography. Countries tend to do the most amount of trade with their neighbours and this is especially true for food, which needs to remain fresh. Even more true in a society which is becoming increasingly aware of keeping a lid on food miles because of climate change.

Currently 44 per cent of all our exports go to the EU. A further 15 per cent goes to countries with which Europe has trading deals, such as Korea and South Africa, so that makes our exports which are dependent on being part of the EU 69 per cent.  These arrangements have to be renegotiated again by the UK.

Many people from think tanks, to business leaders to the head of the Bank of England to former Prime Ministers, have put these arguments forward many times. Different experts from different backgrounds all have equally compelling arguments for why no-deal Brexit will be disastrous.

The most pressing thing now, is not to dwell on the figures but get as many MPs on our side as we can. The only way we can stop our myopic government stop charging ahead with a no deal is to get as many MPs together to work together to figure out how to stop it. 

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Radix is the radical centre think tank. We welcome all contributions which promote system change, challenge established notions and re-imagine our societies. The views expressed here are those of the individual contributor and not necessarily shared by Radix.

Comments

  1. Stephen Gwynne says

    The UK is deep in ecological debt which means the UK population needs imports to survive. The required international trade, including trade with the EU is the primary driver of climatic, environmental and ecological disruptions and degradation as foreign biocapacity is despoiled to satisfy the ever increasing consumption expectations and the ever increasing hunger for profits and wealth.

    Parliament had three opportunities to avoid a no deal in order to deliver the mandate of the EU referendum. 17.4m people voted leave to bring our increasingly alarming ecological debt under democratic control.

    No Deal preparations are well underway with the primary goal to regain the necessary democratic control over national policy in order to adapt and evolve British systems towards a sustainable, sufficient and resilient future for all.

    Adaptation will require disruptions to the ecologically damaging free trade model which enables businesses to nonchalantly override concerns about climate change, biodiversity loss and the degradation of the ecosystems on which we depend for our survival.

    The concerns of international businesses and their profit motivated business plans is a secondary concern to the need to bring the UK back into ecological balance.

    The integrity of national ecologies is the primary source of our long term survival, not short term international business profits.

  2. nigel hunter says

    Your article should be more widely circulated to inform discussion about what start up businesses need to grow. Brexit couldl mean less people risking opening up a business.This will be compounded with more ‘paperwork’ needed to trade with the rest of the World. A further contraction of the economy would arise. Brexit could equally suck confidence out of the economy

  3. Paul Gregory says

    Radix has changed its presentation to be even worse than it was before. I am unable to read the script comfortably or the biographical note. Previously I would mark the text I wanted to read, copy it and reproduce in a word processor, which enabled me to choose font and font size. This procedure no longer works.
    I am therefore unable to comment.
    Radix could of course just email me the comment in an unformatted style.

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