Business people ‘not stepping up’ on Brexit

posted by Francis Churchill
5 October 2018

An “alarming” number of business leaders are failing to engage with politicians over Brexit, CIPS economist John Glen has said.

Glen said it was “incumbent” on business people to engage with politics and the civil service to shape the outcome of the UK’s negotiations with Europe, and urged them to do more.

Speaking to procurement professionals at the eWorld procurement conference, Glen said: “I know a little bit about what’s going on in the Department for Transport and in HMRC around customs and the advice that they are getting, and I have to say that business people have not stepped up to the plate.

“They have been invited into the conversation and it is alarming how many big names have decided not to go and even just sit in the room – forget about advising government.”

He added: “I would encourage you, I would plead with you, to engage with the appropriate ministries to make sure if there is a Brexit you frame it in a way which is in your interest.”

Glen, who is also director of the Centre for Customised Executive Development at Cranfield University, said business engagement was important because even well-intentioned changes in regulations can have unintended negative consequences on business.

Talking about some of the unexpected impacts of Brexit, Glen pointed to the results of the most recent CIPS Brexit Survey, that found 8% of UK businesses with EU supply chains would find it less expensive working with an UK supplier. “Why aren’t they doing that already?” he said.

But, conversely, 32% of EU businesses with UK suppliers said it would be less expensive to work with an EU supplier. This implies EU businesses were happy to use the UK supply chain without realising there were less expensive options until Brexit forced them to look.

“It’s the nature of business that when we have a disruptor in the system what it causes us to do is to look at alternatives, and sometimes we actually find that some of those alternatives are better,” he said.

Glen also warned that Brexit was not happening in isolation from the rest of the economy. It is happening at a time when the economy is near full employment and new technologies – including AI, big data and the internet of things – are set to change business models.

“If you’re looking to bring [supply chains] back into the UK, it’s hardly surprising that you’re coming up against capacity and skills shortages because we’re at full employment,” he said.

This also impacted migration, said Glen, and businesses will still look to import labour even if freedom of movement with Europe ends. “Immigration into the United Kingdom, whether we like it or not, is driven by the growth of the UK economy. If you guys need workers, you’re going to go wherever you need to go to get them because the alternative is it undermines the growth potential of your organisation.”

Glen predicted the UK would Brexit with a plan similar to the government’s Chequers template of regulatory equivalence for goods, and said he didn’t expect freedom of movement to end up being a problem for negotiations. He also predicted the island of Ireland would become an important transit route for goods.

However, Glen added it was in the UK’s interest to secure an interim period. “I pray with every ounce of my being… that we have a two-year transition period. We do not want ‘day one no deal’,” he said.

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