What does Brexit mean to British businesses in Europe?

25 Jan 2017  |  by James Alty

Exactly what will the likely commencement of our exit from the EU in 2017 mean for businesses.

I was lucky enough to travel extensively through Europe as a young child and later in my life my father swapped jobs with a lecturer from Dartmouth College enabling us to live in Vermont, USA for a year. When I got my first job, it was quite natural to accept a chance to work in the Netherlands. I was encouraged by my Grandfather who had received a Commonwealth Fellowship many years earlier to continue his education in the USA. He advised me that working overseas broadened the mind.

Living in the Netherlands in the mid-eighties and driving overnight after work on a Friday to ski in the hills of Germany for the weekend, all the while crossing national borders at motorway speed seemed an amazing contrast to overseas travel from the UK. I’m not sure the lack of sleep helped my skiing, but the memory of being a real participant in an integrated Europe is still distinct.

I first met Rob Downs, co-director of Apteco, when we started work in the Netherlands on the same day and so both of us were comfortable with our strategic choice in 2007 to grow Apteco by expanding in overseas markets. We researched the potential markets and selected D / A / CH because of the size of the market, the maturity of the marketing industry, the stability of the economy and the accessibility from the UK. After several years marketing and selling from the UK, Apteco GmbH was founded in Frankfurt in June 2012.

In 2014, when David Cameron held the Scottish Independence Referendum, I was riding my single speed bike from one end of Great Britain to the other. Visiting three of the countries in the UK (I edged into Wales on my way from Lands’ End to John O’Groats) at cycling speed gave me a chance to consider the potential impact of the vote. I felt that clearly we were better together. Britain’s historic economic success will not be maintained in the face of global competition if we are fragmented and separated by jurisdiction and regulation even while sharing a common land mass.

When the EU Referendum was subsequently called by David Cameron I remember thinking he had no choice. He was squeezed between a faction of his own MPs and the threat from the UK Independence Party, a group he had dismissed as the lunatic fringe not so long before. However, I envisaged the status quo would prevail and thought that David Cameron would be noted as a Prime Minister who managed to hold together two unions.

At the start of the referendum campaign, I wondered how to contribute to the Remain side. There was no groundswell of volunteers, no cry for fund raising, no clear forum for contributing to debate. In practice, every family, business, social group and sports team debated at the local level while the national debate was debased by fallacies repeated daily by both sides. The electorate did not believe the fanciful claims about the money that would be saved, but neither did they believe the doom laden prophecies of the Remain side facing possible defeat. The discussions about the free movement of workers seemed laced with xenophobia bordering on racism. Only too late did we contemplate the British working in Europe or touch on any idea of the significance to our economy of the flexibility of the huge pool of willing and cost effective labour from every corner of the EU.

And so it happened. Watching and listening live overnight, I finally heard the BBC call the result. A majority had voted for the United Kingdom to leave the EU. Living through the spectacular fall out of the result over the following weeks as, the Government of David Cameron collapsed, deflated, punctured like a balloon on the spike of European politics, it felt exciting but also almost certainly damaging. We were risking the long term future for our country and the success of generations to come as if we were a kid saying we didn’t want to play anymore and that we would take our ball home. Maybe it felt pleasingly dramatic at that moment, but our friends would look at our departure and think less of us as a result.

Theresa May arrived saying “Brexit means Brexit”, when actually it means UKexit, but that is too hard to pronounce. The pound has spiked down, some costs in the UK have risen and more seem likely to rise further. Until the Prime Minister’s speech on January 17th the Government seemed determined on a negotiating stance of secrecy based on catching all the other members of the EU by surprise. Or asking to pay for access to the single market or negotiating our own trade deals or perhaps not … or perhaps just making it up as we go along? Hardly a convincing strategy for long term economic success.

Although we now know that parliament will have a vote on when to trigger Article 50 – which I see as fair given the magnitude of the decision – I’m certain that, in 2017 we will proceed to start our exit from the EU. Even given their natural affinity with the Brussels legislature, I don’t believe any British politician can stand in the way of the referendum result. We hold referenda infrequently in the UK and when we do, our deep seated expectation of fair play and democracy means we respect the result.

But that commitment to EU disengagement does not mean we will become an isolated irrelevance on the north-west of Europe. The British have a steely determination to make the best of their situation. We accept compromises and pragmatism as a way of life. We can see the bright side of the situation and find a way to make the best of it. Feeling liberated from EU regulation, we will adapt to the need to make our own, finding a new way to fit in global competition. Working with Europe when we can, working directly with other markets when we cannot.

For Apteco, it was clear from the day of the result that we would naturally support our European business. Thank goodness our investment phase was complete – we were not immediately damaged by the fall in the Pound against the Euro. We reassured our staff both in Warwick, UK and Frankfurt am Main and committed our financial strength to ensure their continued employment irrespective of the impact of Brexit. The essentials of our choice of the DACH market remain unchanged by the vote – the size of the market, the maturity of the marketing industry and the stability of the economy. Only the accessibility from the UK and the likely regulations around trade seem changeable, but in truth the German legal and taxation systems have been sufficiently different from the UK that it does not seem impractical to face trading in a newly negotiated framework. The essentials of good customer care and great technology will mean Apteco in DACH will continue to succeed as it has done in the last five years.

I think it is a crying shame that we have allowed concerns over migration to drive us to give up our position to lead the EU on the environment, trade, energy and security. Recruitment of skilled technicians in Warwick is one of our biggest challenges. Apteco benefits from being able to recruit skilled developers and designers from the whole of Europe. Unfortunately, we’ve selfishly turned our backs on our good friends in Europe just when the new realities of the internet economy began to present the harshest challenges to the established order. At a time the world needs to find a new way to distribute wealth and resources, we’ve looked inwards rather than forwards. I hope in the years to come we will find a new way to contribute to a re-balancing of trade and regulation that will surely take decades to complete. In the meantime, we look forward to working with our European friends in new and innovative trade.

We’ve also seen what 2017 means in terms of data trends, download our new report The Omni-Channel Data Trend Report 2017 now.

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James Alty

Managing Director

Founder & MD of Apteco, James is a technologist at heart, now responsible for ensuring we meet our clients’ needs with powerful software and great services. Outside Apteco, James is a squash player, private pilot & single speed cyclist.

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