Election campaigns are ignoring the B-word: Brexit
Politicians have paid lip service to ‘global Britain’ but the reality is that Brexit has made international trade harder for businesses, says Simon Massey
If you’re a business leader that’s been scouring the party manifestos this week for a detailed plan on how either Rachel Reeves or Jeremy Hunt are looking to turbocharge growth, you will probably have been left sorely disappointed. While the main parties have talked loudly of their ambitions to restore the UK’s trend GDP growth, there has so far in this campaign been a deafening silence when it comes to boosting international trade and mitigating the ongoing impacts of the B-word – Brexit.
Yes, our trade deficit is an issue that predates our departure from the European Union, but there is no doubt that the ‘slow puncture’ that many economists believed Brexit would inflict on many exporters has, sadly, materialised. The current deal is not working in practice for many firms.
We have heard a lot about ‘Global Britain’ – it’s something we support – yet the stark truth is that the Government has so far only paid lip service to the idea. Increased customs checks and regulatory divergence have made it more cumbersome and costly for UK businesses to trade with the EU, and the pace of signing new trade agreements with other nations is simply not fast enough. Menzies recently commissioned its Greatest Leap study to uncover what is holding back the growth of ambitious UK companies, and barriers to exporting are a key concern. Alarmingly, 55 per cent of the 500 businesses we spoke to are either not considering or have decided against international trade.
There is clearly a crisis of global ambition among British businesses and it is going to be impossible to grow the UK economy without growing British exports. The question that needs to be debated now is, what should the next Government do to turn this situation around?
While 19 per cent of businesses told us the situation warrants rejoining the European single market, we need to be pragmatic and focus on how we can make the current situation work. A fifth of leaders say that barriers from Brexit, including ongoing confusion regarding export and import regulations and the chaos of new border checks, have made it uneconomic to trade with the EU – so many simply aren’t attempting it. Almost a third of leaders say international trade won’t be viable unless we reopen the Brexit deal to realign more closely with EU standards and regulations.
Our clients are coming to us for help, but there’s significant room for improvement when it comes to government support for potential exporters. Constant reorganisation of departments, from UK Trade and Investment to the Department for Business & Industry, has caused widespread confusion about where to seek guidance.
I see the ambition in the eyes of the fast-growing scale-ups we work with, and despite a backdrop that can appear bleak, we need to restore optimism. There is huge potential for both British goods and services, and even within the existing regulatory framework there is often a strong business case for international expansion to be made. Imagine the potential for our economy if we could start making it that much easier?
We have around 20 days of campaigning left until we cast our ballots. The business community deserves at least one day dedicated to a grown-up, honest debate on how they will be supported to trade internationally, including the manner of our interaction with the EU. Fast-growing businesses need to see a clear vision and plan from a Government that supports international trade and will push them to realise that while growth is difficult, it is by no means impossible. Businesses will be clamouring for change from day one, so let’s work together to make ‘global Britain’ more than just a marketing slogan. In having the conversation openly before the 4th July, the next Government will have the political mandate to act decisively for British business.
Simon Massey is managing partner at Menzies LLP