A new piece of pan-European research released by the Council of British Chambers of Commerce in Europe (COBCOE) highlights the numerous areas of British-European integration which international businesses regularly interact with, and which they feel may be subject to change as part of the ongoing Brexit process. The extent to which businesses and their supply chains cross borders and take advantage of these existing structures is difficult to grasp, but through business case studies and 27 roundtables held across 18 countries, the report seeks to provide a new understanding of the complex business relationships that underpin both the British and European economies.
Britain is identified firstly as a hugely valuable part of the European economy, and as “Europe’s global springboard”, but the Report finds a number of areas of risk for international businesses navigating the Brexit process, calling the European market one of the most highly integrated and interdependent economic regions in the world, such that “it is rarely conceivable to consider European businesses in national terms”. When speaking of the efficiencies afforded by this integration, the businesses interviewed for the report made it clear that whilst the removal of tariffs in the market is important, it would be the imposition of non-tariff barriers that would have a more fundamental effect on the way that businesses operate. In this regard, three main areas where the introduction of barriers to trade would be detrimental to trade would be significantly detrimental: Tariffs and customs procedures, regulatory divergence, and people.
The report further finds that the uncertainty about the future that Brexit is causing is already causing disruption to European businesses and their decision making. The evidence gathered suggests widespread delays in investment decisions, and that Brexit-related risk management is causing a drag on productivity. As the date of withdrawal approaches, even the remote prospect of the need for structural change is requiring decisions to made now such that changes be implemented in time. The key message is that businesses still do not feel they have close to adequate information in order to plan, which is forcing preparations for the worst-case scenario to be taken at this early stage. Business are anxious for unambiguous signals from the EU and the UK as soon as possible in order to be able to plan effectively and not waste resources pre-emptively adapting to a scenario that may not manifest itself.
Overall, the message from European businesses is that there is significant concern about any loss of the efficiencies afforded to them by European-British integration, and that Brussels, Britain and other European governments are not listening to their concerns. Whilst businesses accept that some changes will be necessary, it is a matter of urgency that a predictable framework is established within which they can continue to operate, plan, grow and compete effectively during the period of change and beyond. Businesses are frustrated by the lack of progress thus far, and are particularly concerned that political game-playing could result in the UK withdrawing from the EU without a deal. “Neither side acting alone, nor a deal where both sides act solely in mutual self-interest, will secure an outcome that will promote the continued productivity and competitiveness of the European economy. Only a collaborative approach to Brexit can secure a deal that gives certainty and avoids needless costs and bureaucracy. A bad deal is a bad deal for everyone.”