With Parliament suspended, Professor Nigel Driffield from Warwick Business School comments on what a potential 'no deal' scenario means for businesses.
Nigel Driffield, Professor of International Business at Warwick Business School, said: “With the prorogation of Parliament and the latest Brexit developments being played out in front of the whole world, it is worth considering one of the oft used phrases in this current debate, that a no deal Brexit will provide the certainty that business craves.
“Leaving our largest export market, with no indication of our terms of trade will do the opposite for many businesses. Those who have, or are part of supply chains that cross into the EU and back to the U.K. will have simply no idea of whether their business is viable, until they see the systems in process.
“There has been much talk of business preparing for Brexit, but consider this: suppose you are a tier 2 supplier in a European value chain and you do all that you can to prepare. You seek alternative supplies, you buy / build / rent additional warehouse space, and you ensure that your staff have the correct visas. However, suppose another tier 2 or tier 3 firm (perhaps in another country) fails to prepare, your part of the value chain still grinds to a halt, and your customer still stops ordering. What do you do?
“In the long term, a no deal Brexit will led to 5-10 years of wrangling over trade deals, with the UKs position much weaker, and so business will not be able to invest with any confidence. A fall in the pound may be good for those inward investors who are looking to acquire U.K. assets at a discount. However, it will deter those firms who are seeking to invest to create jobs or to trade, as the uncertainty surrounding the value or revenue from those investments will render them too unstable.”
29 August 2019
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