In November, the British High Court ruled that the Government has no right to trigger Article 50 of the Treaty of Lisbon, therefore starting the BREXIT process, without the Parliament’s consent. Such a vote in the Parliament may alter the BREXIT process. The Government appealed the decision at the Supreme Court and the hearings are underway. This legal battle gives hope to the REMAIN supporters that the United Kingdom would stay in the European Union after all. Even so, the impact of the BREXIT referendum over businesses unfolds every day. The lack of clarity over the future political actions makes the damage even harsher. CEOs in the UK can’t plan ahead, not knowing whether BREXIT will happen or not and how it will happen. As analysts put it, CEOs probably operate with more scenarios, prepare for all the possible outcomes, and wait to see which scenario would be closer to reality. Therefore, the legal battle over who has the right to have the final say on triggering Article 50, only adds up to this uncertain environment.
Moreover, a recently leaked memorandum revealed that the Government has no overall plan for the BREXIT process. The information was later dismissed, yet Theresa May’s Cabinet didn’t make an announcement on the clear path the government was going to follow to take the UK out the European club. In the same time, the pressure on the government is increasing every day. It comes from citizens who see the prices growing and their earnings decreasing (due to the pound’s drop). But it also comes from businesses who are asking for reassurance deals, like the one Nissan was able to secure with the Government. May’s Cabinet keeps making promises, but it is unclear if it will be able to keep them. It would all depend on the BREXIT negotiations with the EU. And the remaining EU states will probably be harsh on the UK to discourage other countries from leaving.
The Positive Important in November:
- British start-ups might eye other countries. Germany seems ahead in the race to attract british talent and new companies. It has sent in London the “Pop-up Lab Berlin”, which stopped in many venues to showcase the opportunities the German capital is offering. Germans told media they were already in contact with about 40 start-ups, mostly from the IT&C business, that are interested in relocating to Berlin or have already started making steps in that direction. CEOs of such companies are frightened that in a year or two they might have to get visas and pay in order to work with other EU countries. Some are not relocating abruptly, they just send a part of the team in Berlin and wait to see how the BREXIT negotiations unfold. Naturally, other cities than Berlin might be tempting as well, but should focus more on promoting their assets.
- Britain would still need immigrant workforce (probably more than ever). Unless seasonal workers will allowed to come to the UK, fruits and vegetables might go unpicked and rot in the fields. The UK farm and food industries wrote an open letter to the Government, asking access to EU and non-EU seasonal and permanent labor and the assurance that immigrants already working permanently in the UK would be allowed to remain. They stressed that foreign workforce is essential for high quality and affordable food delivery. Otherwise, they say, the marked would be flooded with cheaper and lower standard imported food. The companies signing the letter stated that their combined turnover is £92 bn. Moreover, media highlighted that the Government has many infrastructure projects. For example, it wants to build a new high-speed rail line and a new airport runway. Therefore, it needs workers and is going to need to find them abroad. Even some major companies, like telecommunications provider BT Group, stress the need for immigrant labor and say they already see a shortage of qualified workers. Therefore, Britain still needs both qualified and unqualified immigrants to fill the jobs. And, as after the BREXIT referendum many foreigners said they plan to leave the UK, the need for immigrant workforce can only grow.
- Other EU countries might get an infusion of young British talent. The BREXIT referendum has shown a huge generational divide. 75% of young voters (18-24 years old) have chosen to remain in the EU, according to polling data. But older people decided otherwise. Almost 60% of pensioners voted for Britain to leave the EU. Shortly after the referendum, the frustrated cohort took to the streets to object the results. But the die was cast. Now, 29% of youngsters want to leave the UK, more than double, compared to 2015, when only 13% wanted to move somewhere else. It is the biggest ever increase, according to a recent survey conducted by Intrum Justitia. Yet, taking into consideration the proportion of people aged 18 to 24 in other countries that plan to leave, the situation isn’t so concerning in Britain. For example, in Hungary, 46% of young persons want to move somewhere else, in Italy, 43%, in Germany 10% and in Denmark 11%. As for the Brits, they would certainly weigh their options and opportunities carefully before actually starting to pack their bags.
- European agencies headquartered in the UK would have to relocate, if Britain leaves the EU. The European Banking Authority (EBA) and the European Medicines Agency (EMA), two bodies with key roles in the EU, are based in London. Established in 2011, during the financial crisis, EBA contributed to the creation of a set of harmonised rules in banking. It also has the mission to assess the risks and vulnerabilities of the European financial sector, therefore it has conducted important stress tests for banks. EMA evaluates and oversees the safety use of medicines in the EU. Although the Commission has the last word regarding the authorisation of a treatment on the EU market, its decision is based on the recommendation made by EMA. Such recommendations are not legally binding, the Commission is not obliged to follow them, but it usually does. Anywhere they would go, these agencies would bring along important businesse, they would organise events and conferences, invite specialists. Not to mention that they would create high paid jobs. EBA employs around 160 financial experts, while EMA has a staff of about 900 persons. The decision about the relocation of EBA and EMA is to be taken in Brussels. But, understanding this opportunity, many countries lobby intensively to be chosen as hosts. Italy and Spain seem to be ahead in the race. Italy set a “task force” with the mission of luring both agencies and already sent emissaries to London to discuss the matter with officials from EBA and EMA. Spain wants EBA in Madrid and EMA in Barcelona. Authorities there have put aside the secessionist dispute to work together for this bid. But countries like Romania and Bulgaria don’t host any EU agencies and, unless they work out a strategy quickly, they will remain empty handed.
- UK’s leading position in the pharma industry might be shaken. As it hosts EMA, pharma companies invest in conducting their clinical trials for new medicines in the UK, to be geographically close to the regulator. A study conducted by the Association of the British Pharmaceutical Industry in 2015 has shown that the UK is the number one destination in Europe for phase one clinical trials. For phase two clinical trials the UK is in the second place, behind Germany and for phase three clinical trials it is in the third place, after Germany and Spain. These clinical trials for new medicines mean investments in test centers, employment of specialists and, most important, early access for patients to possibly revolutionary treatments. If EMA will be moved somewhere else, pharmaceutical companies might decide to relocate their clinical tests as well.