Will we see a business brain drain?
Britain’s impending exit from the EU has rallied a host of cries from its European brethren, encouraging businesses to continue accessing European skills and resources by relocating elsewhere.
These rallying calls have been heard. Whilst some UK based internationals wait to see the EU exit deal, others are charging ahead with the steam and energy of a power boosted intercity train; reviewing both the landscape and their options, should they choose to exit.
So, for those businesses considering a relocation of at least part, if not all of the business, where will they go? Well, this depends on business sector and skill availability.
Take for example London’s financial businesses (currently the EU financial capital). Many of these businesses are internationally owned and were established in the UK to harness unrestricted EU market access. The CEO of Deutche Bank recently cited that it would be odd for his bank to trade the sovereign debt of EU nations from outside of the EU. As such, a large number of the 12,000 employees are likely to be relocated. This number alone is significant – but not when compared to the possible relocation of the 70-100,000 staff between now and 2020 suggested by Price Waterhouse Coopers.
We will probably see these companies relocating staff to the other leading European financial centres such as Zurich, Geneva, Frankfurt and Luxembourg (in order of European ranking).
The Bertelsmann Foundation reported that almost a third of British and German companies would consider relocating (or at the very least, reducing their UK business presence). The Institute of Directors reported that 4/5 of businesses felt that Brexit would harm their businesses. UK businesses are now, therefore, confronting a period of uncertainty and possible downturn.
The technology industry has been unanimously in favour of remaining in the EU as demonstrated by the Guardian Newspaper who found that none of the 18 leading $billion Tech companies based in London considered that leaving the EU would benefit them. It is almost certain that we will see many of these firms relocating at least part of their operations.
Due to London being the financial EU capital, Fintech (financial technology) has seen considerable growth in the UK. Fintech’s success has been driven by unfettered access to European skills (in particular bright EU graduates looking to gain experience and start their career) and also pan-EU licensing allowances.
The alternative relocation destination of choice is likely to be Berlin, the capital of Europe’s strongest economy. Berlin’s Economics Minister is reported as saying that she continues to receive dozens of emails from London businesses planning to relocate their operations to Berlin. Not only are we likely to see relocations of Fintech companies and new start-ups to Berlin, but we are also likely to see new European graduates choosing Berlin Fintech companies as their employment targets.
The Creative Industry, (which covers a significant breadth of professions, such as advertising, marketing, branding, publishing and graphic design) has traditionally relied on the dynamic and mobile skills pool of EU creative professionals. The need to constantly adapt within this ever changing industry makes easy access to a broad, talented pool critical and many businesses are now left scratching their heads as they try to establish the way forward. Whilst many will wait to see whether the Exit deals enable continuation of access to these skills, others are starting to hedge their bets and consider potential relocation strategies.
Recognised as a creative international power house, London has long attracted some of the best that Europe has to offer. Access to the Erasmus Programme has been integral to this. Established in 1987, the Erasmus Programme is a pan EU initiative which enables university students a funded opportunity to study / work elsewhere in the EU. The programme is key to enabling EU students the chance of consolidating learning at some of the greatest creative industries whilst also enabling companies to attract the highest talent as part of their intern schemes. It is without doubt that some companies will establish an alternative EU presence to allow continued access to this valuable resource. Where? Essentially anywhere in Europe that will serve as an attraction to talented resources will do. Some suggest that Dublin will be a strong candidate.
In the case of European creative talent, the same sentiment remains true. To attract the best EU talent, the choice of location will depend on the ability of that location to attract the talent itself. Relocating to a European backwater won’t cut the mustard.
Car Manufacturing Industry
The Society of Motor Manufacturers and Traders reported that 77% of its members saw the EU as fundamental to the manufacturing business. The industry contributes in excess of £15 billion pounds to the economy and we are home to large name manufacturers – including Ford, Toyota, Honda and BMW, amongst others. Many of these companies chose to operate out of the UK due to the UK’s EU membership; giving them the ability to recruit workers from across Europe, increased negotiation strength when tendering for international deals and European innovation funding.
The situation is still in the air post-Brexit and none of the above companies have as yet made their potential relocation plans (if any) clear.
What is clear however is the petitioning from our European brethren who are promoting the benefits of moving operations to their home countries.
Take for example, Lithuania. Lithuanian Antanas Guoga (MEP) sent a letter to the UK automative industry expounding Lithuania’s benefits in respect to the country’s technical expertise. Antanas writes:
“Our combination of deep technical expertise, commitment to quality and convenient logistic positioning for access to Scandinavia, the CIS (former soviet republics) and Western Europe makes Lithuania the perfect location for automotive manufacturers.”
So, could this become a destination of choice for car manufacturers?
Not all the companies planning to relocate will actually relocate and, of those that do, they may only relocate specific parts of their operations. At the very least however, most will be prudent enough to at least consider their relocation options.
It may be that, on a personal level, our extrication from Europe may in reality bring continental Europe even closer if we are one of the 70,000 possible relocatees quoted by Price Waterhouse Coopers …. Surely that’s not a bad thing!