Planning for Brexit – A beginner’s guide

Whether we voted for or against leaving the EU on 23 June, there is one fact we must all get clear in our minds – this really is happening.

Those of us who work in the private sector have spent much of the last fortnight considering what it means for our own businesses and for the economy in general. Here are a few preliminary conclusions that might be helpful to those in other businesses and those responsible for business policy in Wales.

First and foremost, denial just wastes time. Die-hard ‘Remainers’ should not pin their hopes on petitions for a second referendum or talk of Parliamentary ambushes, while starry-eyed ‘Leavers’ need to accept that, whatever their hopes for the longer term, the short term involves enormous uncertainty and consequent market turbulence.

This might require some mental adjustment, because many on both sides assumed that we would never actually leave, and that any ‘Leave’ vote would be a pretext for further negotiation and some sort of fudge. This is, after all, what has usually happened when the EU lost referenda in the past. In the event, it was surprising how quickly the EU itself moved to squash that prospect. It seems that they cannot wait to be rid of us.

In economic terms, the EU is right. If it is to be done, it is best done quickly. However, for political and diplomatic reasons, it suits the British government to keep the ball of Article 50 in the scrum for a bit longer. Do not be misled by this. While the last three weeks have reminded us that there are no certainties in this life, all practical planning must be based on the assumption that notice under Article 50 will be served at some point.

The second conclusion is that, while some form of ‘regional development’ will remain in place, Wales will have to become less reliant on it. There is no doubt that many will miss that ‘European’ money – actually taxpayers’ money – but it was always jam, not bread and butter, or least that is how it should have been viewed. Remember that ‘regional development’ existed long before the EU and that the British government, for many years, did not access all the European money it might have done because EU priorities were not necessarily local priorities as the government assessed them.

Indeed, perhaps this is the time to look closely at the whole ‘regional development’ model. Most parts of the world – including all the poorer regions of Europe –  have similar ‘regional development’ programmes. While it is difficult to spend huge sums without doing any good, and some places have indeed been transformed, the fact is still that nearly all those most reliant on such programmes, by definition the poorest, have remained relatively poor.

Wales is a perfect example. Decades of ‘regional development’ have not narrowed the gap with the more prosperous regions of the UK. New roads and factories, and training schemes and the like, are all very nice, but not transformative unless they are used by viable businesses.

Just as a man on the dole would rather a viable job than more dole, so a poor region needs to focus on attracting viable businesses not development funds.

This leads to the third conclusion, that everyone in Wales needs to grasp a simple truth – that viable jobs and viable businesses are those which provide other people with the goods and services they need or want at a price acceptable to both parties.

This truth applies to individuals, to businesses, to regions, and to nations: the key to one’s own prosperity is meeting the requirements of others.

This means we need to go out into the world and sell. If the world does not want what we are offering, then we need to find out what it does want. Globalisation is the friend of anyone who understands this.

So the fourth conclusion is that our national motto, especially for the next few years, must be ‘Export or die!’

Exporting may in fact be easier than many assume. Despite the misinformation spread by both sides during the Referendum campaign, the work done by the WTO means that international trade with nations outside the EU is not as difficult as it used to be, and even the EU’s own infamous tariff walls are not as high as most imagine. Indeed, if the pound remains low after our final exit from the EU, this effectively negates the effect of the tariffs on many non-agricultural products.

There are actually great opportunities for exporting over the next few years, and the Welsh Assembly could find a useful role in leading a national export drive, helping recruit agents abroad, and advising on internet marketing.

In general, the Assembly needs to be more positive about business if it is to replace lost development funds. It was telling that in the Nigel Farage v Carwyn Jones debate, the response of the latter to a question about business was a tirade about ‘workers’ rights.’ This anti-business mindset has to change. There can be no ‘workers’ rights’ without workers and no workers without viable businesses.

Finally, there is no need to panic. ‘Brexit’ will bring enormous challenges, no doubt about it, but it may also force us finally to face up to some longstanding problems. If we are to build viable, exporting businesses, we need to do address obvious weaknesses in our education and training systems, our tax and welfare systems, our legal and regulatory systems, our political and administrative systems, and our transport and infrastructure systems. We have been putting off tough decisions because they are tough. We no longer have that option.

If we wait passively to see what ‘Brexit’ brings, it will indeed be the catastrophe that some are predicting, but it does not have to be. The choices we make now may be more important than the one we made on 23 June in determining whether we are an isolationist backwater or a global winner.

 

John Winterson Richards is a management consultant, author of The Bluffer's Guide to Your Own Business and How to Build Your Own Pyramid: A Practical Guide to Organisational Structures, and editor of The Bluffer's Guide to Management.

3 thoughts on “Planning for Brexit – A beginner’s guide

  1. Wales’ biggest trading partner by a long way is England. However much effort we put into creating export markets across the world whether for widgets or lamb chops the return is going to be significantly less than the return from “exports” to England.
    However as we are part of the same nation state as England and a very much smaller part, it just not going to happen that the strategy of any Westminster government will be to develop Wales “export” market to England at England’s expense or detriment.
    If the Welsh business community is interested in business rather than an attachment to the idea of a UK, or likely future England(andwales) then Wales has to have as much control over the decisions that form it’s destiny as it can take.

  2. many of us in the ‘private sector’ had been contemplating the unthinkable before the vote – and had (mistakenly) thought that the Welsh government were doing the same!! Hah!

    Wales has a trade surplus with the EU – that needs to be protected – or what? And that’s the point … after all those years of playing down the Welsh dimension, the consequnces are now becoming terrifyingly clear. The vote on leaving the EU was meaningless – like voting for sunshine – because it was taken without heed of the technical context. That is how Wales should proceed. And firmly. An independent Wales would NEVER have called for such a referendum in the first place.

  3. John raises points that the Gorwel Think Tank and Wales Governance Centre have since the result was known about the need to for Wales to adapt to the new reality and tackle long standing structural social and economic problems because it’s the only way forward. The alternative is becoming an administrative unit in a new England and Wales entity.

    However the pessimism he raises is justified as the Welsh political class on the Leave and Remain side are in denial, Leavers are swatting away calls for a plan as their activists crow about the result and dismiss anyone who disagrees with them, while Remainers are either indulging in self loathing or ignoring the result and continuing to hold out the begging bowl to Westminster, that’s the sad reality of Welsh politics.

    The signs aren’t good on raising Wales profile and exporting either, yesterday Daniel Zhou of China Marketing Service called for Wales to raise it profile abroad at the Royal Welsh Show, a point put to First Minister Carwyn Jones whose reply was only to talk about access to the European Market as his priority – was there more in the interview where he addressed the issue or did Carwyn ignore the question?

    Another recent example of Welsh Government reacting not leading was during Wales’s recent success at EURO16 where the team was being written about in newspapers as far away as South America and Indonesia. Publicity that you can’t buy yet the Welsh Government’s promotion of Wales was restricted to handing out Visit Britain leaflets at a stall in Paris and launching an advertising campaign after the team came home and Wales was slipping from people’s minds.

    No doubt we’ll attract tourists from this initiative, but can you imagine the Scottish or Irish Government’s missing an opportunity like that to promote themselves to the rest of the World? No me either and especially after Brexit Wales can’t afford to miss these opportunities.

    Time will tell if Wales is better off, but with such lackluster political leadership, businesses dependent on grants and so few willing to take risks it makes the challenge of tacking Wales’s problems even greater.

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