Illustration: Camilla Perkins
We’ve been following companies on the front lines of Brexit since the 2016 referendum. CEOs on both sides are dismayed.
Here is how the companies Bloomberg is following through the Brexit process describe the divorce: “omnishambles,” “farcical” and “a joke.” And that includes the company whose chief favours leaving the European Union.
“There are no heroes here,” said Alasdair Pettigrew, the chief executive of Boxarr Ltd., a Bristol-based startup that designs software for complex engineering and manufacturing projects. He thinks Brexit is misguided. “Everyone involved seems to be out for their own power and their own self-aggrandisement.”
Alasdair Pettigrew, chief executive officer of Boxarr Ltd.
Photographer: Chris Ratcliffe/Bloomberg
Just a few months before the deadline for the U.K. and the EU to finalize their separation agreement, Prime Minister Theresa May is preparing for the prospect of departing without one, so divided is her Conservative Party. Four of her ministers resigned last month amid a rebellion over her approach to Brexit. And after appointing a new Brexit Secretary, May took personal control of negotiations with the EU.
Pettigrew is perturbed over May’s difficulties in making Brexit happen. “Omnishambles, isn’t it? It does make me wonder if there’s some strategy behind it to make it so disastrous looking that we end up with an acceptable fudge.”
Brexit supporter John Elliott, whose Ebac Ltd. manufactures water coolers, dehumidifiers and washing machines in the northeast of England, also thinks the process is being managed badly, especially when it comes to May’s goal of preserving the current trade relationship with the EU.
“The way they’re negotiating is stupid; it’s a joke,” Elliott said. “The politicians are useless, and the civil servants are worse. If we stop trading with Europe, it wouldn’t be a big problem.” Not even for him, he says, even though about 80 per cent of his water coolers are sold to EU countries.
Sam Hodges, Samir Desai and James Meekings, co-founders of Funding Circle Ltd.
Photographer: Simon Dawson/Bloomberg
One of the four companies, Funding Circle Ltd., declined to comment on the process ahead of its initial share sale in a few months. The London-based fintech, which arranges loans between investors and small and medium-sized companies, hasn’t seen an impact on its booming portfolio. Traditional banks, meantime, have shrunk their net lending to small firms, according to data from the Bank of England.
“We are regularly facilitating more quarterly lending than any the traditional banks,” co-founder and CEO Samir Desai said in an email.
Funding Circle is preparing to hold an initial public offering later this year on the London Stock Exchange that may value the company between one billion to two billion pounds. The debut would be a bright spot for British business in general amid the woes of Brexit.
The U.K. was the only Group of Seven countries to have slower growth in 2017 than in the previous year, government figures showed late last month. Gross domestic product, which rose 1.7 per cent last year, is forecast by the median of economists surveyed to expand 1.3 per cent in 2018.
Mark Gorton, joint managing director of Traditional Norfolk Poultry Ltd.
Photographer: Luke MacGregor/Bloomberg
Mark Gorton, who sells five million free-range and organic birds every year from his Traditional Norfolk Poultry, sums up the situation with a rhetorical question: “Can it get any more farcical?”
While business continues to be strong, he said, finding workers is “getting harder and harder and harder” as his primarily Polish and Lithuanian workforce shrinks. The government’s proposal to allow seasonal immigrant workers won’t help because his needs are year-round, he said: “It would be helpful to know where all the workers are that are going to do these jobs when we leave.”
One thing that motivated May to take control of the negotiations was calls from leading companies to clarify the chaotic process. European aeroplane manufacturer Airbus SE in June issued a warning that the company was activating contingency plans to move its U.K. investments elsewhere if no orderly departure from the EU was agreed to.
Elliott’s response: Be my guest.
For Boxarr, on the other hand, Airbus’s concern is a business boon. Airbus, a major client for Boxarr’s software, is using the company to run Brexit scenarios for its supply chain.
“No one likes disruption, but it does provide an opportunity,” Pettigrew said. “All these scenarios are things that Boxarr can model.”
Pettigrew draws his highly qualified staff from across the EU. For now, they don’t feel like they will need to leave the U.K. anytime soon, he said.“Our staff are all very realistic,” Pettigrew said. “They’ve got enough assurances of their status in the U.K. at this point not to be too concerned. We’ve got some great people from all over Europe, and none have expressed significant worries.”
Elliott favours immigration controls and says having a policed border, such as between Northern Ireland and the Republic of Ireland, is a necessary part of leaving the EU. He thinks the government is deluded if it thinks it can have it both ways.
“They’re just messing about with these funny words like a frictionless border. That just means no border,” he said. “You must have friction. It’s just one of these phrases Remainers like, which are meaningless. It’s like saying I have a frictionless water filter.”
John Elliott, founder of Ebac Ltd.
Photographer: Matthew Lloyd/Bloomberg
One thing Elliott and Pettigrew agree on is that there shouldn’t be another Brexit referendum, something some politicians are arguing for. For now, it remains a fringe idea, the most vocal proponent of which is former Prime Minister Tony Blair.
“The referendum was a huge, disastrous mistake, and I don’t think you can just put it right by asking the question again,” Pettigrew said.
— With assistance by Edward Robinson, and Stephanie Baker