Last week, the Financial Times ‘FT’ hosted its 3rd BREXIT briefing in London, during which senior journalists and industry leaders discussed the latest developments in the BREXIT negotiations.
One notable keynote speech was given by Sir Charlie Mayfield (Chairman, John Lewis Partnership) on the needs of business both in the run-up to and the aftermath of BREXIT.
“The UK needs to get match-fit for life after BREXIT.”
– Sir Charlie Mayhew, Chairman, John Lewis
“Get match-fit!”
This was Mayhew’s repeated plea to UK businesses – to start looking outwards rather than inwards, to invest for productivity gains, to get ready to take on the world.
To date, Mayhew pointed out that UK businesses had been relatively quiet on BREXIT issues versus a very public and noisy political debate, but now the time had come to speak out, to demand an injection of practical reality, to set the country on a trajectory post-BREXIT to enable the UK to thrive, not simply survive.
Key takeaways:
- World Trade Organisation ‘WTO’ tariffs are not the sensible option– the UK needs a deal and is completely unprepared to cope without one. No country has ever left an institution like the EU; it will take years to unravel such a union in such an interconnected world.
- Low friction is not a viable alternative to frictionless– people underestimate just how lean and interconnected modern-day supply chains have become. For example, most supermarkets hold only 3 days of perishable food stocks and rely upon the ro-ro ‘roll-on / roll-off’ system remaining in place at Dover. Just adding 2 minutes (low friction) to every lorry passing through would soon result in 17-mile tailbacks on the M20!
- An EU trade deal should be an absolute priority– the EU currently accounts for 60% of UK exports, and 90% of food imports. We need to start by deciding what we need with the EU, and then decide what trade-offs we are prepared to accept, all this before we start trying to do trade deals with countries such as India.
- The decision to leave the EU was a cry for better livelihoods – however, since 2007, wages have stagnated, there has been no increase in productivity, and standards of living have declined. By improving our productivity to EU standards, we could unlock €100bn annually for the UK economy which would dwarf €40bn BREXIT bill.
- “It’s very difficult to prepare for what you don’t know”– John Lewis, like many other companies, has spent vast amounts of resource on contingency planning, but it is impossible to mitigate the worst-case scenario effects when you deal with over 70 countries and thousands of suppliers.
“Our productivity lags the EU, but there is a much bigger gap between best versus the worst in the UK – that represents a real opportunity.”
Conclusion
With about 9 months to go until the BREXIT leave date (29th March 2019), the time for posturing has passed.
The UK needs a deal and needs a good trading relationship with the EU, so the question remains: what compromise is the government willing to accept to allow businesses to prepare properly for BREXIT and look to the future rather than bemoan the past.
For the full write-up of all the speeches at the BREXIT conference, please click on the following document link:
