TheCityUK’s stance on continued access to the EU’s single market calls for the UK and the EU to maintain to “trade freely under broadly similar conditions”. This concept has the benefit of maintaining the status quo with respect to EU trading and, as a result, reducing the uncertainty created by the Leave vote. However, this will not be popular with Brexiteers who do not want to maintain the status quo and, in some cases, advocate leaving the single market to avoid trading off on the free movement of people. The question then becomes a balancing act between controlling national borders and maintaining the UK’s trading relationship with the EU.
What, then, does the UK stand to lose if there is a ‘clean break’ from the EU? TheCityUK’s evidence based finds are that the financial and related professional services (FRPS) industry is the UK’s biggest single generator of tax revenues, contributing 12% of economic output and generating a substantial trade surplus. It also creates employment for approximately 2.2 million people (more than two-thirds are these being employed outside London) in highly-skilled trade and six of the top ten apprenticeship employers in the UK are FRPS firms. All this, TheCityUK asserts, makes the FRPS industry critical to the UK economy and, importantly, over half of its services exports go to Europe making it vital that the EU relationship be maintained in some way.
The report does not ignore the new and exciting opportunities within the wider global community, but it is clear on what the UK stands to lose by cutting ties with the EU.
For the FRPS industry, being able to directly service businesses and customers in the EU marketplace (known as ‘passporting’) and the free movement of skilled workers are key drivers for growth. To be clear, leaving the single market does not mean the UK cannot gain access to it, but membership and access are two very different things. It is, however, not clear yet what access will look like once negotiations have taken place, so businesses should be preparing to deal with the impact of leaving the single market.
Most successful businesses recognise the need to stay positive and be able to take advantage of a difficult situation. Businesses should look for opportunities in times of uncertainty and stay on top of developments as they unfold and they should definitely not ‘rest on their laurels’ until the Government invokes Article 50 (triggering the UK’s exit from the EU). Many economists report that whilst growth in our economy may be slowing down we remain one of the fastest growing economies in the world with a strong financial and legal sector helping the UK remain a strong prospect for trade.
Further, reports of a decline in the value of sterling can help boost exporting, alongside other industries. Businesses that depend on importing supplies or other add on goods should be alive to price fluctuations and the potential for increased import prices. It would, therefore, be advisable to consider your business plan and how these potential changes could affect your business. Take time to plan in an effort to mitigate the risks of what the next few years may bring.
Vanessa Crawley and Ross Hayward are solicitors in the corporate team at SA Law