Why Brexit represents a challenge and opportunity
David Newble, managing director of TTP Labtech, gives his view on what the EU referendum result means for business.
The dust is beginning to settle following the decision by the UK electorate to leave the European Union and regardless of the side of the debate supported we are beginning to look forward to a new future.
What some have dubbed the ‘phoney war’ has started. Any good economic news is being used to prove that Remain arguments were exaggerated and bad news is used to argue that the decision to leave has significantly damaged our economy. The reality is that nothing has changed yet but much will over the forthcoming months and years.
So what should companies like TTP Labtech consider as they prepare for the inevitable changes? Clearly the outcome of negotiations with the EU and decisions taken on trade policy, industrial support and research funding will shape the direction of the UK economy for this generation of business leaders and the next.
Exit from the EU is forecast by some commentators to be late in 2019 or possibly 2020 and the guidance being given by the Government is mainly holding statements regarding funding levels to settle markets reacting to uncertainty.
What is clear is that the policy direction will be driven by political as well as economic objectives.
As such it is critical that business leaders and the organisations representing them ensure that politicians, who until now relied on the European Parliament and European bureaucrats to establish trade policy and rules, are clear on the critical issues.
We must ensure politicians understand what is needed to create an environment where business can flourish outside the EU, making the most of new trade opportunities presented across
Some will say that it is too early to plan and that we need to wait for the outcome of negotiations. Clearly it will be different for every business, but for companies like TTP Labtech, with 60 per cent of sales outside of the EU (including the UK) relying on technological innovation to maintain a market leadership position, there are potential challenges that need to be considered now.
It is possible, even probable, that the deal negotiated with the EU will result in some level of free trade agreement with the EU but with the UK leaving the EU Customs Union. This will allow tariff free access to European markets in some or all areas but with the UK able to negotiate its own trade deals with countries outside the EU.
The impact of this is likely to be increased administration to implement point of origin rules and increased time to clear goods through customs.
For a company selling capital items and consumables it is likely that warehousing solutions within the EU will be required for low value higher volume products where customers expect next day delivery.
The other more significant longer-term issue is access to staff from overseas. As a company whose success relies on rapid development of new products to address new scientific research needs, TTP Labtech relies on highly skilled research scientists and engineers. There is a shortage of these skills in the UK and recruitment of staff from outside the UK, very often from EU countries, has filled this gap.
Free movement of people made this relatively straightforward,
but the prospect of tighter restrictions means this will become more difficult.
If our future growth is not to be constrained it will be important for the government to develop an immigration system where existing employees from the EU have a secure future and where companies can advertise highly skilled positions to overseas applicants confident that a visa will be forthcoming for both the applicant and their family.
Looking beyond the immediate challenges there are already opportunities emerging.
For example, we have been successful in many countries around the world. However, India has proved challenging.
Having recently established an Indian subsidiary to address this market more effectively, the potential for a UK trade deal coupled with India’s recently passed tax unification bill, leading to a single Indian market, offers the potential for significant growth.
If we are to make the most of new opportunities we all need a relatively stable trade environment. Government policy needs to support long-term growth, rather than short-term political aims.
There is much to play for.
:: TTP Labtech, based on Melbourn Science Park, develops and supplies laboratory instruments to the life sciences research community.