The first Sussex Economic Forum was held on 16th and 17th November 2017 at the Metropole, Brighton and Kreston Reeves was delighted to be one of the sponsors. Senior Partner Andrew Griggs was one of the panel members for the debate Economic growth and the effect of Brexit.
After taking part in the panel discussion, what are Andrew’s views on the business community, the effect of Brexit on the county and what are the opportunities for growth in 2018 and beyond?
“We are lucky in that Sussex is a vibrant county with a rapidly growing population and a thriving business community in sectors such as construction, technology, manufacturing, wholesale trade, retail, tourism and shipping,” Andrew said.
Many large businesses are based in the county including American Express in Brighton, The Body Shop in Littlehampton, Bowers & Wilkins in Worthing, Hastings Direct Insurance in Bexhill, Ricardo Plc in Shoreham-on-Sea, Rolls-Royce Motor Cars at Goodwood, Thales UK in Crawley, and Gatwick Airport, one of the busiest airports in the UK, carrying 46 million passengers to 220 destinations each year.
The effect Brexit will have is of course largely down to the trading relationships which are in place on the day that the UK leaves the EU, but it is possible for businesses to pre-empt and plan to a certain extent.
“It is important that we promote and send out a strong message to our customers and suppliers that we as a region are still open for business, and are ready regardless of what is happening elsewhere,” said Andrew.
As a result of Brexit everything is likely to change, particularly customs arrangements and access to the single market.
It is important to make the distinction between ‘access to’ and ‘membership of’ the Single Market. Many countries have ‘access to’ the EU’s Single Market, either through agreed tariffs at the World Trade Organisation or via a Free Trade Agreement. However, the only countries which have full membership of the Single Market, which entails the liberalised movement of goods, services, people and capital (the ‘Four Freedoms’), secured through common rules interpreted by the European Court of Justice (CJEU) are EU Member States.
The European Economic Area (EEA) states only enjoy partial membership, because the EEA agreement does not include a customs union. Turkey’s inclusion in a customs union with the EU does not entail the free movement of services, people or capital. Fundamentally, full membership of the Single Market is predicated upon acceptance of all Four Freedoms.
This principle is in tension with the Government’s commitment to maintaining liberalised trade with the EU, while also curbing the free movement of persons and the reach of the Court of Justice of the European Union. Businesses will need help with how to source materials, goods and services in the event of new trade tariffs.
“The manufacturing sector is particularly at risk from the effects of Brexit, said Andrew. “There will be a greater need for businesses to start exporting more and to think outside of the EU. Businesses may want to prepare now by adopting online and digital accounting services to make the process easier. It is also important for them to understand international currencies trading and online trading, to reduce risk.”
Another perhaps unforeseen impact has been an increase in mergers and takeovers by international companies, who are taking advantage of the UK’s lower exchange rates and this is likely to continue.
“Reducing risk is the key objective moving forwards, so businesses need to concentrate on clear practical plans and to look at a variety of scenarios,” said Andrew.
“As a region, the challenge for local and national government is to help the coastal towns. Economic policies need to be joined up in their thinking to extend the benefit to coastal towns. It is important that they don’t continue to be or become areas of deprivation. There has already been a big slowdown in inward investment which isn’t helping these areas. Economic growth and development of Sussex and in particular cities like Brighton, which is less than one hour from London, is critical to ensure a bright future for local business and its’ inhabitants.”
Andrew adds: “On the upside, we have a digitally reliant economy in the South East. There will be winners and losers as a result of Brexit, and amongst the winners will be the global market, particularly technology. Change creates opportunities, particularly those that create wealth. As a region, we need to develop resources to make the most of and succeed in these new opportunities.”
Businesses however crave certainty, where they can control costs, such as wages and protect profits. For many, the recent sudden weakening in Sterling is making future planning and investment hard.
Brexit will inevitably lead to us being a more self-contained nation and there is a time adjustment for this to happen. Businesses for now need to ‘keep calm, carry on and plan, as there is little more that they can do!