Global mobility: operating in the post-Brexit marketplace

What might Brexit mean for companies acting in a global market? In their keynote speeches at the GXP Summit in London, business leaders discussed the uncertain environment they are operating in.

Relocate Editorial

21 June 2017

"What effect, if any, does the big B-word have on you?" an audience member asked Nilan Peiris of Transferwise during a panel discussion at the recent GXP Summit in London. It wasn't the only time Britain's separation from the EU was mentioned as 'the B-word'. Like Voldemort, for some attendees it was not to be named. Throughout the first day of the conference it was notable how much Brexit wasn't mentioned. 'The B-word' was more likely to come up during Q&As with the audience than on-stage discussions, where it tended to get glancing mentions.But, as Laura Citron, CEO of London & Partners, put it in her keynote address, "No conversation about global trade in London today would be complete without mentioning Brexit, and there's no doubt that it creates uncertainty."

Uncertainty of Brexit for global businesses

The word 'uncertainty' cropped up again and again. That murkiness as to what Brexit actually means might well have been the reason it didn't feature as prominently on stage as it might have.In a keynote fireside chat about winning in uncertain markets David Cruickshank, Global Chairman of Deloitte, addressed the subject indirectly, saying, "I think the more open the economy is for trade, for foreign direct investment, the better business will think it is. The corollary is that if you look at regions around the world that are a bit closed they lose out."Also speaking about the macro-level impact of Brexit, the resoundingly pro-leave Founder & CEO of JML, John Mills, advocated for leaving the single market and customs union then negotiating a free trade deal. But with the uncertainty created by the recent election he now fears a softer Brexit, he said. "I think the danger is that we'll be driven into a very poor deal with the European Union rather like Norway's got, with all of the costs but none of the advantages..."I think we've got a lot of good prospects under the kind of Brexit I describe, particularly in our service sector because of our geographical position, because of our language, our universities, our legal system and so on."He added, though, that on the manufacturing front Britain "is not in such good shape" and that the economy needs rebalancing.

Strong global competition: no room for complacency

Despite the uncertainty, Laura Citron warned about the dangers of inaction, another repeating theme. "At a time of growing global competition in particular, there is no room for us to be complacent," she said."But we are confident that the fundamentals of London's success in business will endure. The things that have made London a global business city will continue. Not only the English language and the time zone, but the diversities of economy, clusters of industry, supportive regulation, a magnet for talent and innovation.“And since the referendum we've seen high profile investment by companies, particularly in the tech sector, ranging from Facebook to Amazon to Google, and those are all votes of confidence in London's future. We believe that we will remain strong by being networked and by collaborating with other cities and other countries and other regions around the world."

The tangible effect of Brexit on local business

Representatives from various city regions were a little less concerned. There were few reports of Brexit having a tangible impact on local business, though the qualifiers 'yet' and 'so far' were put to good use.Representatives of startups, scale-ups and VCs were, by and large, repeating the uncertainty line, though there was optimism about the ways smaller companies might find opportunities in the uncertainty and eventual outcome of talks mixed in, too.Nilan Peiris, whose role for Transferwise is VP of Growth, responded to what 'the B-word' means for his company by saying that, "We started Transferwise in the UK because it was a really good place to start from a fintech perspective - financial services sector, access to the single market, access to great talent.“Most of those reasons still hold true. Obviously the things we care most about are freedom of movement for talent and secondly passporting rights to the single market. We're still a way away from understanding what Brexit actually means, but those are two areas we lobby quite extensively on."David Lee, Chief Financial Officer of private plane chartering startup Stratajet echoed the concerns but saw potential for benefits to talent acquisition. "Running a startup I think that there are two things that are the oxygen for growth - one is talent, and the other is finance," he said."If we look at our team at Stratajet, 20 or 30 per cent are from the UK, 50 per cent from the EU and the rest are non-EU. With talent and money, I think 'what does Brexit do to impact financing and the talent that I've got? Is it actually an opportunity for a new visa regime so that I can bring in talent from beyond Europe a lot more easily?' Because that's difficult at the moment. Nobody knows the answer to this, but that's the lens that I see it through."

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Alex MacPherson, CEO of VC firm Octopus Investments, was more bullish. "Entrepreneurs face challenges every day,” he said. What Brexit is, is another challenge that's put in their way. And actually, as businesses are growing in the knowledge that it's there, rather than having to pivot like larger businesses, it really gives the opportunity for those smaller companies to take advantage, so that's where I think there's a substantial benefit."Are you going to build your team in London to address a European market? I think the answer is probably not as you go forward. But is it going to be massively different as you scale your teams in a couple of those regions? Probably not."Sasha Astafyeva, Principal at Felix Capital, gave a view from the outside looking in. "As a non-EU resident, it creates this constant air of uncertainty. Brexit creates this uncertainty element for a lot of companies operating in the UK, and uncertainty can lead to paralysis.“And when everyone is paralysed it's an opportunity for those who are not to be a little contrarian and say 'do you know what? I'm not going to stop hiring, I'm not going to stop building a business in the UK. There's definitely a sense of people waiting and seeing and there is a benefit to actually doing something in times of uncertainty that can pay off in the long term."

Fiona Murchie, Relocate Global’s managing editor, was moderator and chairperson of the Global sourcing, Logistics and Mobility sessions at the Global Expansion (GXP) Summit in London.

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