G20 Executive Talk Series

September 2016

Brexit

Authored by: Chris Southworth

Brexit means Brexit

Brexit means Brexit is what we are being told by UK officials. In reality, we don’t know what Brexit means other than the UK will be leaving the EU. What comes next is unknown.

From an international point of view, Brexit has come at an unwelcome time for the rest of the world and will have added more uncertainty and complexity at a time when G20 trade performance is weak and protectionis rhetoric is on the rise. G20 leaders have an ideal opportunity to rebalance the message and inject confidence into the economy.

The EU referendum exposed a severe disconnect, anda lack of basic knowledge and awareness about the benefits of trade to local communities and economies. If ever there was a reminder of how powerful perception can be over reality, the referendum was it. For the most part, the trade debate was wholly uninformed at a ground level, even amongst experienced, well qualified business leaders. This is a stark lesson for the G20- which can feel a very long way away from reality for a business leader running an SME. If this can happen in a country that is famously open to trade, then the sentiment can easily translate to countries that are more inclined to be protectionist by nature. In the UK, as in other parts the world, there is a burning need to re-connect and re-educate the populous about the benefits of trade. Business leaders must play a role in reclaiming and promoting this narrative.

There are already rumblings overseas of frustration and impatience with the UK for creating a self-inflicted problem. It is hard not to empathise with this view but it is a mistake to think Brexit has nothing to do with G20. Between now and the general election in 2020, there will be elections in Austria, France, Germany, Italy, Latvia, the Netherlands, Sweden, Romania, Russia and the US.. The risk of rising populism and protectionism is significant. G20 leaders must use the Chinese and German G20 cycles to re-focus messaging and build policies that resonates with local realities or businesses could be facing a hostile international business environment for many years to come. The consequences, as is usually the case, will impact SMEs, emerging markets and poorer communities, who will ultimately feel the impact of jobs being created or lost.

From an economic and regulatory perspective, the UK-EU interface plays a critical role in enabling a stable flow of worldwide capital, goods and services. SMEs and supply chains in the EU and elsewhere are reliant on this flow to generate opportunities, growth and jobs. A quick solution to securing UK access to the EU single market, and putting in place measures to prevent regulatory divergence, is in everyone’s interests.

The G20 China Summit comes at a difficult time for the UK government who have their hands full finding solutions to some very practical hurdles; creating a new trade negotiation team, consolidating a major government re-structure and engaging World Trade Organisation members to gauge the post Brexit possibilities.

The G20 China Summit comes at a difficult time for the UK government who have their hands full finding solutions to some very practical hurdles; creating a new trade negotiation team, consolidating a major government re-structure and engaging World Trade Organisation members to gauge the post Brexit possibilities. These are all issues that will consume the UK government for some time but, in terms of scale of importance, providing certainty on single market access has to be top of the list and the one that matters most for international businesses with UK investments.

By Spring 2017, after the next two quarterly rounds of economic results, we will have more concrete evidence of the impact of the referendum on investment decisions being taken now. Whatever happens next, we can be confident the UK is a resourceful nation and will find solutions; it always does, but looking at Brexit as a UK problem is a mistake.

For G20 leaders, a stable UK-EU interface will be a priority. The last thing the world needs right now is an economy as large as the UK floating in a long period of uncertainty. Now, more than ever, B20 requires strong business leadership to keep a steady hand on the trade and investment tiller whilst the UK and the rest of the world navigate unchartered waters. There has never been a more important time for international organisations, such as the ICC, to support businesses.

Chris Southworth is Secretary General at the International Chamber of Commerce UK. Prior to joining ICC he was Executive Director for Global Partnerships, at the British Chambers of Commerce (BCC), Head of the International Chambers of Commerce Unit at UK Trade and Investment and a Senior Policy Advisor to Lord Heseltine for his independent review of UK competitiveness. In 2011 he helped set up the mid size business

export programme at UKTI and was a Senior Policy Advisor for the 2011 Government Review of Mid Size Businesses. Former roles have encompassed deregulatory policy at Better Regulation Executive, social enterprise policy at the Department for Business and stints in a local strategic partnership and the charity sector. He is also co-owner of a start-up company building homes in Cartagena, Colombia.

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