Lloyd Dorfman: Our exit from Europe gives UK Plc a chance to act on global stageComments Off on Lloyd Dorfman: Our exit from Europe gives UK Plc a chance to act on global stage
When the 20th-century Chinese premier Zhou Enlai was asked about the consequences of the French Revolution, he famously replied: “Too early to say.” Similarly, the true economic and other impacts of Brexit will only be known in the years ahead.
I was strongly in the Remain camp in the referendum debate, so was disappointed by the outcome. Sixty per cent of Londoners shared the view that Britain should stay in the EU, but this unfortunately was not typical of the country.
Rather than engaging in recriminations, we must come together to chart a positive economic roadmap for London and the rest of the country.
In the 26 days since Brexit, while the economy has by no means collapsed, we have seen some worrying signs. The pound fell to a 31-year low against the dollar. It has achieved the unwanted distinction of being the worst-performing currency of 2016, overtaking the Argentinian peso. Investment and property decisions have been put on hold.
The long-term consequences will not be known for some time but it is hard to see it providing a boost this year for the UK economy. As well as posing challenges for our economy, Brexit will be detrimental for the EU itself, making it a less open trading structure.
A key priority for new Prime Minister Theresa May and her ministerial team is to negotiate good access to the EU.
Many foreign companies have invested in the UK because of the gateway it offers to the single market. In surveys, 75% of international investors have said access to the single market is the key reason they are here. Furthermore, EU countries account for almost 50% of our exports, and therefore it will remain a key market. Trade is closely intertwined with location, and our geography as a European nation will not change.
Alongside securing positive access to the single market, the Government will need to reach free trade agreements with countries around the world. Australia has been making positive noises and a recent ministerial visit to India included preliminary trade talks. Another global economic giant on the rise, China, has already indicated they are keen to do a deal with the UK.
In the next two decades, 90% of global growth is expected to come from outside Europe. The fast-growing economies of Asia, Africa, Latin America and elsewhere are ones we should court and cultivate relations with. The Government’s move to recruit 300 specialist staff to help with trade negotiations is welcome, as we will need to put our foot on the gas in this area.
As we come to negotiate the deals, we must approach this with confidence and positivity. The UK economy remains the fifth-largest in the world, and is responsible for 3% of global GDP and 4.4% of world trade (with just 1% of the world’s population). From a business point of view, we have outstanding companies across all sectors. Our corporation tax is one of the lowest in the G20. We are the top destination for foreign direct investment in Europe.
The financial services sector remains the jewel in the crown of our economy, representing almost 10% of the gross value add in UK economic activity.
At Travelex, the company I founded 40 years ago, we managed to grow our currency exchange business around the world. I have seen the strength of UK finance across the world. Of course, there are concerns about its continued success after Brexit, particularly for the City. It remains to be seen whether the passporting rights, enjoyed by UK firms through the EU, will endure. There have been some worrying signs that other financial centres, such as Paris and Luxembourg, see an opportunity to prise business away from London.
As we move forward, we must do what we can to protect and enhance financial services and other sectors at which we excel, like digital and the creative industries. Around the UK, there are 40,000 fast-growth digital tech companies and moreover, according to EY, London is the most likely European city to spawn the next tech giant.
A venture I backed called Polaroid Swing was launched last week by two young British entrepreneurs. It is an exciting new app that enables people to create moving photos.
As we digest the outcome of the historic referendum, it is indeed too early to say with confidence what it all means.
We have to do what we can, however, to make the best of the situation economically over the coming months. In time, the UK will reach a new strategic partnership with the EU. Of course, we will get a better deal if we are strong economically, as it will improve our bargaining position.
Above all, we must emphasise that the UK continues to be open for business, which is the core aim of the Mayor’s London Is Open campaign, launched yesterday. We all need to work together to encourage UK business to write a positive new chapter of trade, investment and engagement in Europe and the rest of the world.
Lloyd Dorfman CBE is the founder of Travelex and chairman of The Office Group and of Doddle.