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Is Britain a No-Go Territory Post Brexit?

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February 14, 2017 By: , No Comments

Is the City of London’s Status As the Gateway to Europe at Stake?

The CEO of Roland Berger, a European management consultancy, Charles-Edouard Bouee recently made sweeping statements about the viability of the United Kingdom in a post-Brexit Britain. While many folks have been likening the Brexit proceedings to a divorce, Bouee has gone the other way. He believes the Brexit is nothing like a divorce, since there are no precedents and no framework for Britain or the European Union to follow. In fact, over the past 5 decades there has hardly been a situation where such dramatic disentanglement has occurred.

 

Recently, one of the top German banking regulators cautioned that the City of London could lose its status as a gateway to Europe. This is especially important, since most financial transactions take place in London. Even Germany has weighed in on this volatile issue. Andreas Dombret who sits on the board of the Bundesbank address German businesses with some startling comments. He cautioned that the UK and the EU were worlds apart even if banking regulations between the two blocks were similar. However, there are calls for reforms within the European Union, notably from the European Parliament’s leading negotiator, Guy Verhofstadt.

 

Why Is Roland Berger’s Opinion Important?

Roland Berger is the biggest management consultancy in Europe. It is also a rival of massive investment companies like Bain & Company, and McKinsey. Given the uncertainty of outcomes post-Brexit, Roland Berger executives are now cautioning clients about the stability of investing in Britain. Flexibility is being touted as the best approach to take, and Roland Berger is encouraging European companies to utilize UK partner companies to conduct their operations. He likened the relationship with post-Brexit Britain to that of asset entanglement.

‘… If things go wrong you may not want to carry on… If you don’t own an asset you can let it go. If you’re completely integrated it is difficult to let it go.’

 

Is Prime Minister May’s Industrial Strategy Conducive to an Independent Britain?

The UK government has adopted a novel industrial strategy which Theresa May presented to members of Parliament, business leaders and trade unions recently. She is of the opinion that it will create a foundation upon which economic growth and prosperity can flourish in the United Kingdom. May is seeking to adopt an interventionist-style approach to the manufacturing sector in Britain. 5 sectors have been targeted for government support, including the nuclear industry, the creative sectors, electric cars, industrial digitalization, life sciences and low carbon dioxide emissions. Unfortunately, business leaders, innovators and various special-interest groups do not believe that protectionist-style measures will assist the UK economy. Rather, they believe that unfettered access to the single European market will be far more beneficial. Business leaders applauded by Prime Minister May on her industrial strategy, but were concerned about the missed opportunities to increase efficiency.

 

However, various sectors are now hard at work lobbying the government for additional support or modifications to the law. They are seeking the establishment of an industrial strategy challenge fund to disseminate millions of pounds for things like robotics, smart energy and new age technology. Some £556 million has been allocated for the northern powerhouse in Cheshire Farms and Manchester, while 170 million pounds has been allocated towards technological development. The challenges for the UK economy are growing by the day, and Brexit woes are simply adding insult to injury. The UK can significantly improve its economic prosperity by focusing on fossil fuels, fracking for shale gas, carbon capture and solar energy. All these elements were absent in the industrial strategy presented by Prime Minister May.

 

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Brett Chatz

About Brett Chatz

Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for spreadbettingreview.co.uk.

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