Adjusting to a new reality
Despite few plans surviving encounter with reality, few would dispute that planning is indispensable. Following the convincing win for the Government in the recent UK general election, the end of the transition period is less than a year away, which in planning terms is a drop in the ocean. The legal and practical consequences promise to be dramatic.
While foolhardy to predict the precise contours of the new landscape, two political drivers appear reasonably certain: the ability to diverge from EU regulations; and the end to freedom of movement for EU citizens. Given the stated indivisibility of the four EU freedoms, the latter will almost certainly result in services forming a minor part of any trade deal.
This would constitute a serious problem for professional services – the UK’s largest sector and vital to the growth of the economy. For example, we employ one in seven of the UK workforce; and in 2017 enjoyed a trade surplus of £42bn and added value of £199bn to the UK economy. Furthermore, the UK is uniquely reliant on services exports (these make up almost half of all exports, compared to an average across the developed world of one quarter).
Our success depends on being able to trade our services freely in the EU and beyond, in particular on the continuation of six elements:
- Strong market access and national treatment provisions for trade in services with as few restrictions as possible
- Mutual recognition of professional qualifications, products and operating licences
- Mutual recognition of the regulatory frameworks and regulators, from data protection to audiovisual media policy laws to statutory audits
- The ability of our service providers to ‘fly-in fly-out’ to facilitate advice across the EU27 and trade across Europe
- Continued co-operation in areas that facilitate trade – such as the free flow of data
- The ability to educate and recruit the best talent from overseas, whether from the EU or beyond.
Worse, there is still no certainty that a trade deal will be signed by the end of the year. Trading without a deal would materially impact our ability to provide services with the same range, depth and speed. Many firms would find themselves at a distinct competitive disadvantage, with some no longer able to provide any services in the EU.
A positive new year resolution is to evaluate the extent that your firm would be impacted by the absence, in an EU trade deal, of any of the six elements listed above or by a no-deal outcome. Next, prepare and share a marketing plan to help mitigate the perceived worst-case scenario. Finally, adjust the plan as reality unfolds in its usual random walk.
Richard Chaplin, Co-founder and Chief Executive, PM Forum