Frost & Sullivan Briefing Explores the Impact of Brexit on the UK Economy and Industry
Thought leaders across the automotive, healthcare and financial services value chain discuss Brexit implications and mitigation strategies
LONDON, Oct. 19, 2018 /PRNewswire/ -- Drawing from Frost & Sullivan's extensive analysis on Brexit and its potential ramifications, the company recently hosted a lively debate on the impact of Brexit on the UK economy and industry at its Chiswick Park offices, gathering an elite circle of senior executives from a broad spectrum of sectors and organisations, including Jaguar Land Rover, AstraZeneca and Nomura.
Frost & Sullivan's experts highlighted Brexit implications for the UK economy as a whole before taking a deeper dive into the impact on the automotive, healthcare and financial services industries in the context of the following three potential divorce scenarios:
- The soft-Brexit or Chequers model, as currently being pursued by the UK government
- The CETA (or CETA-Plus) agreement based on the EU-Canada trade deal
- A no-deal Brexit which would have the most damaging impact on trade
In a straw poll, all attendees expect that the EU and UK will agree to a deal ahead of the looming Brexit deadline on 29 March 2019. "The details of that deal are pure speculation, but it was agreed that the UK government should take Brexit as an opportunity to leverage its core strengths of world-class R&D, technological expertise, a flexible labour market and its strategic location linking East and West to create new industries which will meet the needs of tomorrow," stated Gary Jeffery, Senior Partner at Frost & Sullivan.
Financial services firms in the UK will most likely have to brace themselves for the transition from the EU financial "passporting" to regulatory "equivalence". "While London may be Europe's current Fintech capital, post-Brexit, access to human capital for the second generation of Fintech start-ups will likely be compounded by the lure of buzzing tech talent hubs, including Berlin and Amsterdam," observed Luca Raffellini, Head of Business and Financial Services at Frost & Sullivan.
Senior Partner Dorman Followwill stated that, under the no-deal Brexit scenario, the impact on the healthcare industry will be dramatic, with negatives outweighing positives fairly heavily. However, he is confident that, over time, we will see some of the negative impacts resurrected into positive outcomes if the UK finds other entities with which to partner.
Meanwhile, automakers are developing mitigation plans for Brexit including temporary factory shut-down, renting warehouses and car parks on either side of the border, re-organising their supply chain and building a contingency stockpile.
Sarwant Singh, Senior Partner at Frost & Sullivan, reported that UK new car sales/registrations could fall below two million vehicles per annum, matching levels seen in 2009, following the financial crisis, and could take five years to recover in case of a no-deal Brexit.
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Amid the gloom, the session also focused on the potential growth opportunities to exploit in the wake of Brexit. While EU immigration to the UK is set to dip as the free movement of people ends, companies could tap into a larger non-EU skilled labour pool to meet staffing needs with a possible relaxation of Tier 2 visa caps, said Neha Anna Thomas, Emerging Market Innovation Team Leader at Frost & Sullivan.
With lingering uncertainties concerning post-Brexit conditions, Frost & Sullivan's experts agree that mitigation strategies to limit disruption are the need of the hour. Among the steps being taken by corporates are stockpiling to limit disruptions arising from potential tariffs and customs checks, as well as supply chain review and restructuring.
Industry should have greater clarity on the likelihood of a deal or no-deal scenario ahead of the December EU Summit, the last chance to strike a deal.
The UK and the EU failed to finalise a deal during the October Summit, with the likelihood of a special November Summit now appearing to be weaker.
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For further information on Frost & Sullivan's analysis of the impact of Brexit on the UK economy and industry, as well as the company's suite of in-person Growth, Innovation & Leadership (GIL) Council briefings, please contact:
Kristina Menzefricke
T:+44 (0) 208 996 8589
E: [email protected]
http://ww2.frost.com
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