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British Business - Are We Ready For The Fight?

14/09/2016 11:29

Liam Fox is wrong: British businessman no longer play golf. But it makes me wriggle when I have to admit that he may right about something: British business, at this crucial time post-referendum, lacks a certain get-up-and-go. I don't like agreeing with Liam Fox; it makes me feel oily and as though I should be drinking warm blend-whisky.

Brexiteers hold up torn scraps of evidence: negotiations with Australia on free-trade; a boost in exports; a FTSE rebound; a service-sector stabilisation, and squeal with swivelled eyes that it's all fine and Churchill would be can-can dancing in delight, if so able. But this is the much-expected phoney war; the fight will begin the day we leave the EU, and the enemy will be ourselves.

Britain suffers from a crippling addiction to nostalgia. It sorts of looks over its bifocals at the new, and isn't too sure what to make of it. A few years ago in an Financial Times op-ed I stated that, given my experience as a national retailer, the high streets in England are virtually dead, and as a relic of the past - long since abandoned by the shopper - we should do the decent thing and shut up shop -literally, and get excited for what we can put in their place. It seems that people prefer to buy from their sofas while eating carbohydrates and watching soap-operas than battle the elements on a wind-lashed high street. Who knew?
It didn't go down very well among the bifocal wearers. But as internet and mobile sales soar, local highstreets wither and as BHS switches off the lights, it seems I was right.

To operate in a post EU world, Britain (irrespective of the trade treaties it negotiates) needs to operate with the jungle instincts of deftness, speed, cunning and attack. Sadly, we are sort of a lumbering Labrador who wanders in to places and eventually falls asleep.

We've never needed to be deft; we've had the EU. It was the easy option. It was a place who sort of took our goods without much fight. And even within the EU, our biggest net export customer was Ireland. We didn't venture very far actually into the EU - or its toughest markets, we sort of just popped across the road and asked if they wanted to buy a few things. Being in the EU didn't prevent us from trading with the wider world, we just decided not to really bother very much. We chose to join the Indian party late and we have only recently realised about that big place called China. France, Germany and Italy were not so gentle in their pace. They were signing deals while we're still leafing through old pictures of the Queen - or the war. I operated in India at end of the last decade, Britain was hardy anywhere to be seen - except for in India's past. Other European countries were aggressively courting Indian business and government, and it worked. Germany is India's biggest EU trade partner, and its fifth largest overall. Even the Belgians beat the UK in India. They achieved this within the EU trade rules.

The EU doesn't really see us as a market. We account for 8% of their exports (divided by 26 countries). They won't lose sleep - or give concessions - over 8%. They will eye our big industries which have grown fat and dominant under EU protection - such as financial services - and they will be salivating at the prospect of ripping off some of the lean flesh for themselves. Once-firm friends will become fierce hunters, and they will be savage.

Stripped of our preferential markets, easy options and most profitable industries we are going to be exposed, naked, alone and looking a little bit shriveled. The world markets may be there, but do we have the ability to exploit them? And what precisely are we hoping to sell to the world? Over 70% of our GDP is services - we don't really make very much. Our annual spend on R&D is 1.7% of GDP - almost half of the German figure and below France, too. My fear, as a businessman, is that we will not know what to do in the free trade wonderland (other than feast on more imports) we are so eager to create. And with the possibility of losing a fair chunk of our high-productivity EU labour, anything we do sell could be more expensive than it once was, too.

We have to change entirely the way we think about business; about what we sell, who we sell it to and crucially, how we sell it.

Britain may seek solace and confidence from the past but it can't live in it. It's being forced to join the new world and it must prepare for one almighty battle. But please, whatever happens, don't start playing golf again.

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