MBM Commercial co-hosted a very successful “Brexit for Entrepreneurs” debate with the Edinburgh University Business School on 27th September with about 200 people in attendance. The purpose of the event was to find out what entrepreneurs have to say about Brexit, what they are planning, what their concerns are and where any opportunities might lie.
We are very grateful to a terrific team of panellists who kindly gave up their time to share their thoughts with us:-
- Ian Paterson Brown – the Commercial Director of Payfont Limited;
- Sarah Lynagh - the Chief Executive Officer of Fios Genomics Limited;
- Antonia White - a Founding Director of Ice Robotics Limited;
- Heleen Kist of Skillcast Limited; and
- Adam Christie – the Chief Executive of Calcivis Limited.
They all have large corporate, international business and SME experience and their businesses are all affected one way or another by Brexit.
The big takeaway messages of the evening were:-
Meaning of Brexit
As there was no Brexit Manifesto, we voted for something without fully understanding what it means. Some people were keen to get back control of our Borders, some were keen to get back control of our laws and some were keen to obtain ready access to the Single Market. The Government is now trying to prioritise its policy objectives so that it can deliver the Brexit we want.
As substantially all net new employment comes from young companies which are the principal engine of economic growth, it is essential that the entrepreneurial community should make its voice heard, do all that it can to inform the Debate and influence the policy makers and negotiators to ensure that, in years to come, we will look back on Brexit as an opportunity to reinvigorate the entrepreneurial ecosystem and create more better paid jobs from which everyone will benefit.
European Funding Instruments and Access to Funding
The point was made that all existing European Funding Instruments which have been agreed and are in place will continue for their allotted time span. However, the Government has not yet offered any reassurance about the new funding environment which will replace the existing funding instruments when they come to the end of their life cycle. This is a critically important issue as it takes a long time from the germination of an idea to the creation of a viable new business and there must be no gap in the support available to those who are thinking today about how to create the companies of tomorrow.
Concern has also been expressed about funding for new Horizon 20:20 projects. While the UK remains eligible to apply for such projects until it actually leaves the EU, concerns have been expressed that UK applications might find their way into a “pending” tray which would place UK at a significant disadvantage.
There was speculation that securing future funding for a high growth company will now be harder.
Concern was expressed by all of the panellists, all of whom employ EU nationals, about the employment issues, immigration, visas and so on. It is fundamental to the success of our entrepreneurial ecosystem that we have access to the best people regardless of where they come from, not just the best people in the UK. This raises concerns about the status of existing employees and the ability of employers to recruit from outside the UK. It is critically important that we should receive appropriate guidance and reassurance about all of these issues, as quickly as possible, so that employers and employees all know exactly where they stand. The ongoing uncertainty will place the UK at a competitive disadvantage until it is resolved.
The future success of our Universities is largely dependent on their ability to recruit foreign students who bring new ideas, talent and expertise and also pay full fees. International scientific collaborations are also an essential fact of modern life. In order to stay at the forefront internationally we must be able to recruit and retain the very best talent available and our policy makers must give this vital issue the urgent priority it deserves.
Specific concern was raised about the fact that a drop in the number of EU students to our Universities will result in less students choosing to stay and work in the UK after they graduate. In addition to the risk of a ‘brain drain’ it was discussed that the UK will need to do more to get UK nationals (as well as other graduates) to return to Scotland and bring their experience with them.
Interestingly, the panellists did not seem to be too concerned about regulation although none of them welcomed the prospect of lots of further red tape as they will still all need to trade in Europe. It was discussed that European regulation was in most cases very helpful and a good thing for our society and less onerous than American regulation, at least in the Life Sciences sector. Furthermore sending products to customers in Europe is currently very simple and easy whereas in non-European countries there is a lot more red tape. There is not yet a single market and services and the reality is that anyone wishing to sell products in Europe will still have to comply with all relevant European product standards. The worry for business must be that the UK may need to replace European regulations and standards with new regulations for the UK. This would create another layer of bureaucracy which would not be welcomed by business.
One immediate impact of Brexit is the decline in sterling of about 10% against a basket of international currencies. While this is welcome for exports, it would make imports significantly more expensive so it is very much a mixed blessing. However, exchange rates will be determined by the markets rather than our policy makers. In the meantime, borrowers are able to take advantage of record low interest rates and the FTSE is again trading at record levels.
Financial Services and Passporting Rights
While this issue was touched on, there was no time for any detailed discussion although it will be one of the major single concerns of the Financial Services industry.
Serious concern was expressed by one member of the audience about the rise in “hate crime” and the whole audience shared an abhorrence of this issue. It should be remembered that some of our brightest business people today are the descendants of penniless Jewish refugees who came from Europe as a result of the Second World War. Other members of the audience, who are non-UK EU nationals also mentioned that they and their families felt less welcome now in the UK as a result of the vote and this may have an impact on where their children decide to study and the fact that it may now not be in the UK.
In a world of tightening borders, bright people are increasingly coming to realise that the question to ask is not “where should I stay?” but “how many passports can I get so that I can stay where I want?” Our policymakers must do everything within their power to ensure that our brightest and best are given every opportunity to stay here.
Second Independence Referendum
Time did not permit a detailed discussion of this issue. However, it is understood that Scotland’s principal business organisations have all expressed the view that the additional uncertainty which would be caused by another referendum and talk of another currency would not be helpful for business. The panellists all agreed that political views aside any additional certainty is simply not good for business.
There were mixed views from the panellists about what opportunities may arise from Brexit. Some of the views expressed were that there were simply no opportunities and business in the UK has just got that bit harder. Others expressed the view that in time Brexit will provide opportunities and hopefully some regulations can be relaxed in some areas to help reduce the administrative burden on some businesses. Several of the panellists mentioned that the USA remains a key market for them and that will be a key focus rather than Europe and Brexit may present opportunities with more trade buyers from the USA looking at UK companies to acquire – provided of course the price is right! Most of the panellists mentioned that it would be business as usual and the prospect of Brexit has changed nothing for them in that regard.