The first meeting of the bpi Academy Brexit group was held on 13 March 2017, to discuss the potential impact of Brexit, and the support that members would find useful from government.
At that meeting, the following points were raised.
- It was important that there was two-way communication with Government to ensure that businesses were kept up-to-date with what was happening with Brexit, and also any opportunities arising from new export markets.
- Brexit has already had a significant impact on many of the businesses in the Academy, as well as businesses in general. The biggest area of concern being the impact of the fall in the exchange rate. Businesses are now finding it extremely difficult to cope with the increased costs on goods that they import; particularly as it is extremely difficult to pass this on to customers.
The damage that has been caused by this has been mitigated somewhat by the increase in export turnover (if the company does indeed export), together with the ability of some businesses to absorb these additional costs in the short term. However it was felt that no business could continue to absorb this cost increases for any length of time.
Some businesses had already started to look to bring some of the imported work in-house, however this in itself brings additional costs to the business, which many companies may not be prepared to undertake in such uncertain times. This strategy of import substitution would in the medium to long term have a significant benefit to the Welsh economy; whether this be producing in-house, or moving some of the supply chain to Wales rather than overseas, and with some additional support from government would be far more successful.
- Discussions took place about the suggestions that UK-based businesses are less productive than other G-7 countries, particularly Germany, France, and the USA (where the productivity is said to be around 32% to 33% higher than in the UK). Participants were somewhat sceptical of this figure, and were keen to know how this comparison of output figures is calculated, and whether or not this was affected by things such as the exchange rate.
Further discussion on this lead to an action point to try to identify why these countries were more productive, and whether government sources have this information to hand.
- Leading on from this, discussions turned to whether the above was partly due to increased automation. It then led one of the participants to say that it was difficult now to get the required ROI on new equipment, whereas past investment decisions and been made easier because of the support of grant schemes such as Regional Selective Assistance.
- Further discussion then took place on the type of government support that would be useful as we head towards Brexit. It was felt that all businesses were different and therefore different approaches regarding support would need to be in place; and it was felt that in the past perhaps that there has been a ‘one solution fits all strategy’. There had been talk in the past about government producing bespoke solutions for business, however now, at the time it is most needed, there seems very little direct support available to businesses to assist with the required investments needed to meet the new world we are facing.
Obviously, a great deal of the financial support for businesses that have existed, will now stop as many were supported by European funds. The group felt it would be useful if they were informed which ones were to cease to exist, and which ones would continue.
Assuming that the UK and Welsh governments have funds to replace some of the European programmes; a unanimous request was made that the application for these should be made far less bureaucratic than the existing schemes are. It was felt that the length of time it took to apply for the funding made it unrealistic, as decisions in business have to be made in a short space of time.
- Some concern was raised about the potential of reducing immigration, particularly for those immigrants currently undertaking hard to fill vacancies. Businesses felt that, before implementing a new immigration policy, it was important that government undertook some research to analyse the impact of this on businesses in the UK.
- As regards to the type of support bpi could give to organisations in the Academy, it was felt that in addition to providing our normal open courses, we should also look at a mixture of bespoke, in-house courses, which would include elements of mentoring, coaching and possibly consultancy.
Many thanks to those who took the time and trouble to attend, and their support was much appreciated.
If you would like further information on the BPI Academy or the Brexit Group give Hayley a call on 01685 884175.