Here’s Tom Sime Managing Director at Exchange Communications view on the Brexit elephant in the room which could end up delivering a major blow to the Scottish economy.
Tom Sime, MD of Exchange Communications, admits he’s looking to open a European office. But as business faces up to a post-Brexit Britain with a threat of rising running costs and skills shortages, what’s to stop other firms quitting the UK for good?
It’s been said that Brexit has become the elephant in the room for many Scottish businesses.
Yet, amid increasingly attractive options presenting themselves across the North Sea, that elephant may soon become the stampeding variety, using its strength to push away from the EU markets.
I’m more than happy to admit that my own business is considering opening a European office – and why not?
After all, Exchange Communications is just one among a growing number of companies looking at putting one foot firmly in the European market by setting up subsidiaries in other EU countries.
To my mind, it’s just common sense contingency planning.
We’re certainly not alone in thinking that there could be myriad challenges to attempting to operate as before in post-Brexit Britain, be it the threat of rising running costs or the inability of our non-British employees to continue working as before – and like others, we’re not going to sit back and simply watch it happen.
Unsurprisingly, we’re not keen on tariffs on trade with EU countries and restrictions on free movement.
We need to look to a prudent future, particularly when we’re being told that the UK will likely leave the EU without a deal and we should start to prepare for trade on World Trade Organisation terms.
It’s no coincidence that hundreds of other UK enterprises have already registered in the Republic of Ireland as they look to secure sustained access to the European Single Market when Britain eventually does leave.
With the Single Market being the world’s largest economy and offering the ability to sell freely to 500 million people, we’d be foolish not consider following suit.
In fact, it may surprise some to learn that we’re currently being approached by the Department of Trade for four other European countries including Belgium, France, Netherlands and Switzerland.
They’ve been contacting us at least a couple of times a month to see if we might be interested in a move to a European city.
Furthermore, there are often significant financial incentives offered by local and national governments, as well as the EU itself, while some European cities have made direct appeals to British companies in the aftermath of the Brexit vote.
We would also be looking at a tax nexus in Europe – if we were in Holland, for instance, then we would pay Dutch tax and that wouldn’t come back to the UK. We would also enjoy same-day banking facilities and brilliant digital connectivity.
I’d be lying if I said that wasn’t an attractive proposition.
After all, we’re well placed to quickly set up in Europe, hit the ground running, and there are no significant challenges - bureaucracy, tariffs, and mountains of paperwork are all removed at a stroke.
Of course, Europe is not entirely homogenised for business – there are considerable differences across EU countries including varying employment laws, digital rights laws, for instance – but it should be stressed that legal and economic matters are largely harmonised, making for a vibrant and welcoming environment.
It’s potentially the biggest decision that your business can ever make, and the potential across the North Sea is massive.
Of course, Brexit doesn’t have to mean a complete exit for Scottish companies, but inevitably moving assets out of the UK will make great sense for many.
Individually, we’re already seeing people working in the NHS, science and academia leaving in their thousands – so why shouldn’t businesses consider setting up in mainland Europe too?
Uncertainty over future trading status with the EU continues to rank among the Scottish business community’s top concerns. Perhaps it’s time to act on them.
Ultimately though, Exchange Communications – along with countless other businesses – continues to seek sufficient assurances from the government that will allow it to remain trading effectively in both the UK and EU.
While the Ministries of Trade for other European countries have been actively targeting businesses like ourselves, the UK Government hasn’t been forthcoming with its plans for Brexit and what the full ramifications of it will be, leaving a paralysing ambiguity in its wake.
Undoubtedly, we want to stay in the UK and for the British Government to enable that to happen by putting the necessary tools in place. It must therefore provide a clear vision backed up by robust policies on how UK businesses like -us will operate in a post-Brexit trading economy, while meaningfully preparing us for change by confirming what that will entail.
Government chiefs must also provide assurances to businesses, both large and small, that trade globally will be able to financially survive post-Brexit and not be crippled by new tax and duties by EU counterparts.
How will we be able to retain a position trading in the EU environment? We require clarity and certainty of purpose – a steady hand in a time of overwhelming doubt.
Only then can we truly say that the elephant has been evicted from the room, and that the EU stampede has been firmly called off.