The Director of economic consultancy Regeneris tells Pound Sterling Live the Government will only hurt business investment intentions if it continues to play coy over their negotiating wish-list.
- Government doesn't actually have to keep its strategy and wish-list secret
- End to free movement movement of people will be problematic for the economy, particularly in service sectors.
- Long-term transitional deal with the EU would be welcomed by business
Chris Paddock, a Director at economic consultancy firm Regeneris, says the Government needs to be more open and transparent about their views on Brexit if businesses are to keep investing in the UK over the course of 2017.
Regeneris works with a wide range of local and national government bodies alongside corporate and educational clients and have undertaken hundreds of evaluations of EU-funded projects.
Paddock's call comes as the UK government heads to the Supreme Court to argue that the executive has the right to trigger Article 50 without the consultation of parliament.
For Regeneris, the move is bad for businesses as it reinforces the Government's desire to maintain an fog of secrecy around their pre-Brexit negotiation plans.
“I personally do not buy into the argument that the government has to keep its cards close to the its chest ahead of negotiations, I think businesses would welcome some certainty of their position, even if they are not able to achieve this fully in the longer term,” says Paddock.
Anecdotally, he believes it is a widely-held view of his industry, and cautions of a growing unease in the business sector.
Paddock goes on, “Recent events and discussions I have been involved with have suggested that there is a growing sense of pessimism about the next 18 months. People seem to be a little frustrated at the way things have been handled since June 23rd.”
As an economic consultancy Regeneris divides itself between strategy and policy development to economic impact and appraisal, so it’s no co-incidence that Paddock has been paying close attention to the recent figures surrounding Brexit, and he’s not convinced.
He says, “Although headline economic output figures are OK and retail sales are good, there are some worrying signs in the evidence. Survey data (Markit Economics and CIPS) suggests that business confidence is low. Manufacturing and Construction sectors seem to the sectors which are feeling the strain most of all. The fact that consumer confidence is also falling could mean problems ahead for the retail sector too – meaning that three of our most important sectors (in terms of employment) could run into problems at the same time.”
Most worryingly for the company is that there is no definitive answer yet over free movement of people, something that seems to be becoming more of a cultural headache as analysis shows that a blanket ban would not be that easy to implement, especially if the country needed to protect its workforce.
“Any end to free movement (or at least easy) movement of people will be problematic for the economy, particularly in service sectors. We have for instance, been looking at the hospitality sector in London for a recent project. This is an industry which already struggles to recruit and retain labour which could (in theory) lose two-thirds (See People 1st report that 64% of London’s hospitality workforce are born outside of the UK) of its workforce because they were born outside of the UK. Although may seem like an unlikely scenario, the lack of a clear plan or guidance means that businesses need to remain alive to this as a possibility and hence are worried.”
For Paddock, a solution would mean coming clean to the country, so that public confidence could be assuaged, even at the detriment of any ‘deals’ that may be struck.
He says, “I would suggest to the government that they need to make some decisions and clear on what their aspirations are from a future deal. I think it is important that this is negotiated openly in Parliament – In my opinion, this will put the UK on a more robust footing when it comes to discussions.”
But in the long term, Paddock urges Theresa May to remain brave, he does not forecast an easy time ahead, but with Britain so reliant on home-grown business, it isn’t an area that Paddock believes will thrive with so much uncertainty.
He says, “The government may also need to think about a longer-term transitional deal with the EU which helps mitigate the potential economic shock in the aftermath of finally leaving. This may not play well with the press or those who voted to leave and hence will require a bit of bravery given the government’s current majority.”
Despite what will happen in the future, Paddock is under no doubt what may caused a shock in public confidence, and that is the behaviour of the government since the referendum.
“It is certainly something that the government has not done which has led to nervousness in our company and in the field as a whole. Cameron and Osbourne were clearly not contemplating any out vote and the government had clearly done no planning for Brexit, not even in terms of the internal ramifications for the party,” says Paddock.
Certainly for Regeneris, it seems transparency is the only way forward for this government, whether they want to or not, if their appeal fails at the High Court next month, they may find they have to.