“An Entrepreneur’s Dream?” “A shot in the arm for the Commonwealth” were just a couple of comments I heard at a Senior Business Leaders Luncheon in Singapore last week, whilst discussing the implications of the referendum result held on 23 June 2016 – commonly referred to as “Brexit”.
So two months on, where are we with Brexit?
As many of you may have seen, last week Scott Wightman, High Commissioner for Singapore, Andrew Vine of Insight Bureau and Board Member of the British Chamber of Commerce (Singapore) along with Dr Simon Baptist, Chief Economist, the Economist Intelligence Unit and Rajiv Biswas, Asia Pacific Chief Economist, HIS Markit, spoke on Between the Lines, a Channel News Asia current affairs programme moderated by Loke Wei Sue.
During the programme they discussed what Brexit means for the UK’s relations with the world, as well as its implications for Singapore and the wider region. For those who haven’t seen it, the programme can be found at: Betweenthelines/brexit-and-the-region
In a lively discussion, many commentators, including those mentioned above have offered Immigration as one of the main reasons for the unlikely result. Some say those disillusioned with the European project saw their cost of living increase, the demand for local labour decrease, both of which, adversely affected their quality of life.
So where do we go from here?
Theresa May, who assumed the Prime Minister’s position in an uncontested leadership election after David Cameron’s resignation, has stated that “Brexit means Brexit”, indicating that the UK will invoke Article 50 in early 2017; declaring an intention to withdraw from the bloc and setting forth the commencement of a series of negotiations, ultimately paving the way for the UK’s exit of the EU, two years later.
Key to the discussions will be the Free Movement of Persons and access to the Single Market. Time will tell how these discussions develop, however, the UK is still trading, the FTSE is at one of its highest positions of all time and individual investors, entrepreneurs and large multi-national companies are continuing to invest in the UK. This, in spite of the ‘exodus’ forewarned by the Remain Campaign, in light of a vote Leave.
Whether you agree that the UK should have voted out or not, there was a clear consensus from the British people that the European Project needed to change. One of David Cameron’s last acts as Prime Minister was to return from the European negotiations stating that he had succeeded in obtaining many of the necessary reforms, which ultimately proved to be insufficient for the British people. Some saw this as the European’s complacency, unwilling to negotiate further, thus believing that the UK would not consider to vote out. Even Ladbrokes were offering 4/1 for an out vote in the days leading to the referendum!
Monday 22 August 2016 saw German Chancellor Angela Merkel, French Premier Francois Hollande and Italian Prime Minister Matteo Renzi, meet at the highly symbolic Italian volcanic island of Ventotene. It was at Ventotene where Altiero Spinelli, who is considered to be one of the EU’s founding fathers, wrote a federalist manifesto when he was imprisoned there during the World War 2.
The talks on Monday are to be followed in coming weeks by numerous political meetings in and around Europe, evidently a prelude to a summit next month in Bratislava of the 27 member states, who will remain in the EU after the UK leaves. Time will tell if anything has changed.
Was time up after 43 years of integration?
As a late joiner to the European project in 1973, the UK has consistently been sceptical of its role in Europe (for example, Schengen and the Euro). Many saw the UK benefit from 43 years of integration but had since felt the UK had come to a fork in the road. What should the next steps be? Greater integration? A Norway-Plus model, maybe?
After a number of the Remain campaign painted a disastrous picture for the United Kingdom outside Europe (remember George Osbourne’s Emergency Brexit Budget?): how much of this has been true?
The UK is the second largest economy in Europe and the second largest contributor to the European Union. The EU needs the UK and the UK needs to trade with the EU. Granted, the Pound sterling has been trading at its lowest level for 35 years against the US Dollar, however, this is arguably the substantial boost needed for UK exporters and those looking to invest in the UK. The UK is still the world’s fifth largest economy, and many companies and organisations still wish to be headquartered in the UK, with many noting the strength of the legal system along with the ability of the skilled workforce as key in their decision making.
Outside Europe, in the wake of the referendum result, Australia was one of the first countries to state that they wished for a treaty with the UK. Australian Prime Minister Malcolm Turnbull told his British counterpart Theresa May in early July that he is eager to see the two countries start free trade talks after the UK leaves the EU. Clearly, the UK is in a privileged position.
The UK’s backbone has not changed. The UK offers some of the best education in the world; the legal system and tourist attractions are world renowned; and with over 65 million residents, the UK boasts one of the most skilled and highly educated workforces in the world.
So from now on, let’s take some of the Olympic spirit back from Rio 2016 (where Team GB proudly ended 2nd in the overall medal table) and confidently Bring On the Great!
By Mark Chowdhry
Baxters International LLP
24 August 2016