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PERSPECTIVES


Navigate the change

The UK vote to leave the EU is already having significant implications for businesses. Our experts are here to help you navigate the change.

Overview

If the initial impact of the "Leave" vote in the referendum on June 23rd 2016 was momentous then the events of the weeks and months that followed in British politics may be better described as unprecedented—with both the political landscape and the global economy temporarily rocked by the outcome. After a period of several months where the Government took some time to decide what the next steps might be, it seemed that both a legislative and political timetable was clear. Despite the majority of MP's having campaigned to remain, they still delivered a notable majority vote supporting the government's Brexit timetable, and there was broad consensus for a full withdrawal from the EU. However Theresa May's failed attempt to seek a strong mandate for ongoing negotiations by calling a snap election has backfired. The UK is faced with a hung parliament, and ongoing media reports and rumours of fraught negotiations and shifting political positions.

Put simply we are once again facing a period of prolonged and pronounced uncertainty and organisations should operate with that in mind. Luckily all businesses are familiar with uncertainty. It's what we plan for and the reason why many of us have been transforming ourselves in the last few years to deal with a more fluid and agile world.

While there are some strategies which may be called into question by Brexit—most aren't. The fundamental success factors of any entrepreneurial businesses—serve customers better, focus on digital, be more sustainable, improve productivity and so on remain the same.

Those that can master the art of certainty in the midst of chaos stand to fare infinitely better than those who don't but the overall message should be business as usual only faster.

While there are some strategies which may be called into question by Brexit—most aren’t. The fundamental success factors of any entrepreneurial businesses—serve customers better, focus on digital, be more sustainable and improve productivity—remain the same. Adjustments may be required but the basic message is to stick with the strategy and stay the course. If anything there is a clear benefit in a “business as usual but faster” mode mitigating any downside risk caused by uncertainty. Get out ahead of the change and stay there.

We have a great opportunity to do that in the United Kingdom. We are market-leading in many areas of the global digital economy—retail eCommerce, FinTech, mobile banking to name a few—and we should put that expertise to work rather than fear for its future.

Thankfully less senior management time seems to be devoted to chasing the Brexit Ball around the pitch than was the case in the first few weeks. Most leaders have raised their horizon to the medium term realising that clarity will take some time and that it is likely to be early calendar 2017 before things become clearer.

That said clearly business should, and is, responding robustly where day to day operations have been immediately impacted. The ongoing low level of the sterling exchange rate, despite a recent rally, is one example of that and where market confidence has had an adverse effect on asset values then they will need revaluing. Events such as this absolutely require a rapid and confident assessment of potential market opportunities, impact on suppliers or assets and so forth—and we are seeing clients across all sectors starting to do this.

In our view, there are three main areas of uncertainty currently in play where businesses will need to address confidently.

Firstly it is essential that businesses recognise and respond to the concerns of the 3.2 million EU Nationals working in the United Kingdom. That’s 5 percent of the workforce—and critical to the everyday success of our businesses. Without clarity on what Brexit will mean for any of us we can’t make rash promises, but we can be clear with them that their welfare and careers, are forefront in our planning and thinking.

Second, continued customer confidence is all important. Customers will respond to confident businesses continuing to do what they do best, constantly improving the customer offer and encouraging trade and, indeed, early signs are that this is exactly what is happening given recent retail sales numbers. The last decade of disruption driven by the digital revolution has taught us that businesses which innovate from the customer back and are agile are best placed.

The other uncertainty is of course the two-year Article 50 timeline and by implication what our trading and regulatory relationship will be with Europe going forward. There are examples (the Norway model, the Hong Kong/Singapore approach, the Canadian system) which one can use as a starting point when planning scenarios and impacts—access to markets, to talent, data location and IP, and operating models, financial structures and supply chains and so on. That said, the chance of any one of those other country models being applied to the United Kingdom in totality is small and the mood music from the politicians has been around a unique, bespoke solution for the United Kingdom.

Against this backdrop there are a number of "no regret" actions you can take that will only improve your organisations ability to thrive in any of the possible outcomes. The priority should be to avoid distracting the bulk of the organisation from business as usual and allowing a much smaller group (or task force) to focus on responding.

United Kingdom plc itself is facing the same challenges as many companies, large and small, in terms of managing business as usual while preparing for an uncertain future. It too needs to stay the course of encouraging inward investment as well as exports, building infrastructure and so on; and, like business, this needs to be done harder and faster to ensure that the economy has the best opportunity to perform.  

At the same time, the sheer scale of the challenge ahead will stretch Government’s capacity to deliver—whether it be in terms of negotiations with the EU or, more broadly, for negotiating trade deals with countries around the world. In doing so we need to avoid a fragmented, parochial approach to government—putting aside individual interests. We need to act together as business leaders to support and enhance the Government’s response to Brexit—from sharing our brightest and best people on secondment to Government, which many of us have already done, to engaging in consultation and advisory processes and supporting trade delegations and negotiations to the best of our abilities.

Lastly, we all need to recognise that the vote to leave in the Referendum had many root causes. Immigration was clearly one of them but there is a continuing issue with social inequality and a feeling amongst many that economic growth has only benefitted others, not themselves. While the United Kingdom has been experiencing an economic recovery—the halo effect of that isn’t reaching everyone, and over 700,000 young people remain out of work, and persistently so. The economic impact of that is one thing, the social cost is even higher. Views will differ on whether this is true or not but the fact is that large pockets of the country feel left behind by the recovery—and disproportionately affected by the austerity measures that support it.

At Accenture we believe that one of the most important things we can do as a business is to engage in the challenges of the communities we live in, and that surround us. Our focus isn’t limited to our work within communities or programmes that naturally fit within a CSR agenda—we see our remit as being at the heart of the Growth Agenda—supporting the creation of jobs, improving skills and employability, and contributing to the economic success of the United Kingdom. Accenture, and business as a whole, cannot fix these issues alone but we do have a pivotal role to play in increasing efforts around social mobility through work, through education and through a relentless focus on inclusion and diversity. There are existing, strong collaborations like Movement to Work that are already changing lives and now more than ever they need our active participation. Youth employment, retraining and re-skilling older workers, apprenticeships and many similar initiatives all need greater impetus not less. 

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Phil Davis

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