Brexit, Small Business, Manufacturing and the High Street

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Brexit has come as a shock to nearly everyone it seems, even those who voted for it.

I was a ‘remain’ person myself, but like so many in the UK, I’ll live with the result and get behind it. One part of me is even looking forward to what the new horizon might hold.

Of course, our new political leaders still have to follow through on the promise of Brexit. The huff and the puff of campaigning is over and now the electorate expects to see results.

Brexiteers still have to draw up an exit strategy, agree tariff deals, put their proposals before Parliament and then get a majority vote to see it through.

This parliamentary process ensures that both Brexiteers and Remains have a democratic safety net to fall back on to ensure that we haven’t been sold a pup.

With nearly 70% of the present Parliament coming from the ‘remain’ camp, Parliament will want to see that Britain is getting a fair deal from Brexit, or I suspect, many will simply not vote it through. And then what a palava!

This process is even giving hope to some ‘remainers’ that there might be another referendum, but that’s another matter.

What does appear likely is that we might easily be entering into one of the most chaotic periods in British history since Henry VIII split from the Catholic Church.

How exciting is that…

 

The real people of Britain.

 

I do sympathise with the people up and down Britain who voted ‘out’. Clearly, many of them have seen little or no benefit coming from the European experiment.

People in rural towns and villages across Britain who voted ‘out’ have tried for years to get political parties of every persuasion to listen to their worries but they’ve been constantly ignored in favour of The City and ‘consultants’.

So when working people asked, ‘what about manufacturing industry that needs the skills of welders and carpenters and craftsmen?’, they were told that the future is ‘services’ or more insultingly, ‘The Knowledge Based Economy’.

This notion of a Knowledge Based Economy has managed to alienate half the population.

Well here we are now. Half the population is no longer prepared to be ignored and the politicians have only themselves to blame.

Unfortunately, Brussels isn’t entirely responsible for what is being felt in these towns and regions up and down the country. Some of that plight is down to Westminster making next to no effort over the past 30 years to do anything to regenerate those regions of England. There are mining towns and ship building ports across Britain that have been allowed to wither and die.

 

So what now?

First, don’t panic.

The ‘emotional upset’ of the present situation is probably worse than the actual economic or financial fall-out we’ll see from it.

(That’s if like me you were a ‘remain’ in the first place. If you were a ‘Brexit’ all along then you are probably already rejoicing!)

For me, I am emotionally upset that suddenly a potential barrier has come down between friends and family of mine who live all across Europe. That’s what a lot of people are feeling. It’s as though for many of us we’ve just broken up with people we’ve known most of our lives.

But economically, for the moment at least, nothing has really changed and when it does change, we’ll see the hurdles coming. That means many of us will have time to do something about them. But we must go to work on it now – and that includes the Politicians.

 

A Recession?

There will almost certainly be a recession of some sort – how deep it will be is partially down to what contingencies Mark Carney, Governor of the Bank of England has put in place. And I suspect he is prepared as this is exactly the type of remit he was told to prepare for following the 2008 banking collapse.

That aside, the UK has been having recessions every few years since the end of the first industrial revolution. We keep trying to stretch our economy to unreasonable lengths, so we keep experiencing ‘boom and bust’ economics. We’re used to it.

So in my view, this next economic fall-out probably won’t be any worse than what we’re already used to and definitely not as bad as 2008 when the banks collapsed and we had no financial ‘Plan B’ as we have now.

As I say, for the moment, the loss is mostly emotional.

But we will see a change.

You will find that International companies, particularly Banks, Pharmaceutical and IT companies will gradually put their people into the Euro trading area as new opportunities open up for them. It’s unlikely that they will automatically base new opportunities in the UK, the Banks especially. This is inevitable unless Britain can strike a previously unheard of tariff deal with Brussels.

 

Manufacturing in the UK

smallfactoryBritain won’t be able to easily replace banking, pharmaceutical or IT industries.

So instead it will have to rebuild its manufacturing base for the half of the country who are feeling rejected and who don’t have any meaningful jobs, careers or decent wages.

That correction is a good thing in my view and something that should have been started a long time ago.

We’ve watched our manufacturing base move to India and China in recent years and I haven’t heard one politician even try to make a decent case for a reversal in that trend.

Instead they continued to push out the insult, ‘we’re a knowledge economy now’ – as if to say to everyone in manufacturing, ‘suck it’.

There is absolutely no excuse anymore to accept the current trading relationship that we have with China or India or any other part of the world that is ‘stealing’ our jobs. It isn’t the European immigrants who are stealing them – it is the other parts of the world. Brexit now has a chance to fix this.

With the correct trade deals and some national support and investment from government, we can resurrect many of these manufacturing skills across Britain – the same skills that made Britain great for so many centuries. Skills that we’ve all but lost and have been prepared to throw away.

 

The same is true of our High Streets.

napoleonA ‘Nation of Shopkeepers’ Napoleon once called us, but for years the British High Street has not been growing.

The British High Street has been in dire straits for years.

Buying and selling is the centre piece of any trading economy. And it begins with our shops at home because that’s where we go to buy things.

What has any government done to reverse the fortunes of the independent retailer in the UK? One government after another has just taken it for granted that the UK High Street is dead.

Britain now probably has the least diverse High Street of anywhere in the world. It certainly has the High Street with the most National Chains and Charity Shops that I’ve ever seen.

The same big brands turn up on every High Street in Britain because it is only National Chains who can afford to push their way through the cost and legislation they have to deal with to be a retailer in today’s UK. That too is not the fault of Brussels. That is our governments.

Independent Retailers have been dying on their feet in the UK for years.

David Cameron made a half-assed attempt to look at this by appointing Mary Portas as his retail Czar when he first came into office. Apart from miserably failing to make any worthwhile investment into the High Street as she was instructed to do, it seems to me that most of what she did was to turn the exercise into a television programme that promoted her. For David that was good enough…problem solved!

 

The UK High Street

highstreet2The story I hear almost every day from companies is that they cannot even get their product into UK shops anymore.

My assumption, having spoken to many retailers in recent years, is that retailers haven’t got an inch to move in terms of taking risks on new products. Every square foot of retail space in Britain costs a fortune and has to earn money immediately.

This is absurd…

We can criticize Spain and France and Germany all we like, but continental High Streets are full of diversity and independent shops because they’re not taxed out of the system by cash-strapped councils looking for sky-high business rates.

Nor do our continental friends have to suffer insane rental prices that are driven up by foreign investors and property speculators.

British startups find themselves in the absurd situation where they can’t get their product into a shop so they are forced to try to sell it Online instead. That might sound like an obvious solution, but in reality it is often impractical.

Here’s a truth. Not every product is suitable to be sold online in the first years of its life. You can’t buy a suit online. You can’t taste cheese online or feel the quality of a handbag or a pair of shoes. These products need to be in shops first and then they can be sold online.

 

Here’s a straw poll of mine.

I would say in recent years that roughly 8 out of 10 startups I see who focus only on the UK for their growth go out of business in a matter of 2 years or so. This is largely because of the obstructions I have just mentioned above, i.e. the cost of manufacturing in the UK has not been addressed and lack of Retail opportunities.

At the same time, I would say that roughly 8 out of 10 businesses who focus on overseas markets stay in business…

Why is this?

Canada, Australia, the USA, the Middle East, India and several African nations are eager to do business with the UK. Yes, it’s more complicated than popping over to France or Germany but growth can be significantly better in these countries than in the UK.

We keep importing products from India and China accepting that as the status quo for the movement of goods. We’ve been brainwashed because successive politicians have accepted this and told us that that’s the way it is. Why does it have to be that way?

There are more millionaires in Mumbai alone than there are in Britain. The Elite of India love British products and they have money to spend. So why aren’t we selling to them? Why aren’t we approaching Retailers in Mumbai? Or Hong Kong or Shanghai?

Brexit has that right…we ought to be selling to these countries and not just buying from them.

The world is there for us.

 

In Conclusion

By all means keep trading in the UK, but at the same time start looking beyond the UK and even beyond Europe for your future business.

For many, Brexit is the hope of new opportunity. For entrepreneurs, Brexit means bringing money in from across the world in addition to Europe.

Now more than ever, entrepreneurs must apportion a part of their effort to Marketing, PR, Social Media and Retailing that looks to other parts of the world and not just the UK and Europe. That’s partly what Brexit is about.

When you take this view, you’ll realise that there is little to be worried about.

 

peter_tonerAbout Peter.

I am a former Internet and Communications advisor to Harrods, The Confederation of British Industry (North West) the Metropolitan Police and many others. Having been a ‘Futures and Options’ trader in the 80’s specialising in currencies, I took my skills into Marketing and PR and today advise a number of companies on their Social Media, Marketing and PR Strategies. If any journalist would like introductions to small businesses in the UK who are already doing what I write about here and am basing my opinions on – I am happy to make introductions to them.

 

 

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