In the relentless drumbeat of Brexit news and views, sober studies published by law firms inevitably get a bit drowned out. But for those who are paying attention – and those concerned with matters relating to UK and European FDI really should be – a survey released by Baker McKenzie makes for potentially alarming, if not surprising, reading.
The firm surveyed 800 business leaders in six key EU markets: France, Germany, Spain, the Netherlands, Sweden and Ireland. They represent Big Business; all come from companies with at least a £250m annual turnover, and nearly a third with more than £1bn.
And they are not happy with how Brexit is playing out. They don’t like Brexit as a concept to start with; more than three-quarters see no upside to it at all and Irish executives are particularly incensed, with 97% seeing only negatives from the UK departure from the EU. This is a sentiment surely inflamed by the thorny, seemingly intractable issue of the Ireland-UK border, with most scenarios making life more difficult for Irish exporters.
While European business leaders don’t see a lot of positive answers to Brexit’s riddles – and the UK government is waking up to this painful realisation itself, it would appear – their stated preference on trade terms is for a UK-EU free trade agreement in favour of the UK remaining in the customs union…. Not that they are being fully heard. More than half of the executives surveyed felt they have not been consulted much on Brexit negotiations and that their views are not well represented. They can, of course, speak with their investment decisions and nearly half said their companies had reduced their investments in the UK since the vote. fDi Intelligence’s independent data on greenfield FDI into the UK backs up this negative trend, with project numbers and volumes of inward greenfield investment declining over the past two years in the UK.
Very little is happening on the negotiating front that is likely to calm these concerns, and if anything, as the process drags on, confidence only wanes with regards to any kind of reasonable divorce deal. The conclusion of an EU-Japan trade deal only highlights the risk of the UK being edged out of crucial export markets and of massive supply chain disruptions.
While Big Business in Europe does need to be considered – as it brings big trade and investment opportunities – it was another finding in the survey I found as an equally major worry that should get bigger attention. In talking to 250 skilled workers from EU countries currently working in the UK, Baker McKenzie found that a striking 70% reported feeling unwelcome and 56% are likely to leave the UK before the negotiations even conclude. Given that its talent pool is one of the most important attractions of the UK as an investment destination and a linchpin to its economic competitiveness, this is no small finding. Time is running out to change their minds.
Courtney Fingar is editor-in-chief of fDi Magazine. Email: firstname.lastname@example.org