As The EU Referendum Approaches, Is A BREXIT Good For Business?
Many business leaders are entering the political debate about the approaching EU referendum. I thought it was time to give a few thoughts. Views here are my own, but also represent our official company position, writes Mike Hunter, CEO of Better Languages.
Firstly, some direct impacts of the EU referendum on our business:
Better Languages translates between a wide range of world languages, including all official EU languages. Our leading specialism is retail translation, with expertise in both fashion retail and food. It is hard to predict how the result of the vote will affect the business. Companies trading internationally will still need translation. We have certainly seen a decline in enquiries from first time potential exporters, as uncertainty doesn’t help business planning.
The biggest direct impact on our business is likely to be on the supply side however. Here is how:
- We make extensive use of in-country freelance translators throughout the EU, and in other parts of the world. We trade with both suppliers and customers in USD, Euro, and Sterling. An immediate impact of the announcement of the referendum was to weaken the pound. Any further or sustained weakening, will push up our costs and impact competitiveness.
- Erasmus placements: we have a very good EU funded Erasmus placement scheme. This enables translation students from European universities to undertake placements with us. Leaving the EU would result in the collapse of this programme. Previous students have gone on to have successful careers in the translation industry. One of our top freelance translators is one of our former students.
- VAT and cross border trading would become much more complex. There would be uncertainty whilst we reach a new agreement between the UK and the EU.
There is also likely to be direct impact on our customers, some of the biggest issues being:
- Divergence of legislation. We translate lots of food packaging. Currently UK and EU requirements are broadly identical, as UK legislation is essentially EU legislation. This may not change in a day. However, a stated aim of the “no” campaign is to have UK control of UK legislation. Over time UK food packaging requirements will vary with the rest of Europe. This will add cost. Companies will first have to ensure compliance to EU requirements (or UK if an importer), and then think about translation. As none-members of the EU, we would also lose the ability to influence European law. As a result, the EU could require UK exporters to implement new requirements when selling in the EU. The UK would have no ability to influence those requirements.
- Exchange rate uncertainty. If independent commentators such as the IMF are to be believed, the UK economy will be weakened by a Brexit. This is likely to push down the value of sterling. International trade will be harder, as it will push up supply side costs.
- Political uncertainty. It is likely to take some time to negotiate leaving the EU. Norway is the example of a nation which is outside, but most closely aligned with the EU. They have some EU benefits as they are part of the trading block, but no political power. They can not influence European decisions. The leave campaign, believe that Britain will be strong enough to be able to negotiate directly with the EU. However, on the outside the country will lose the ability to lobby and negotiate in Brussels.
Some impacts on the Nottingham and UK economy
- Nottingham’s student population would be very significantly affected if the UK leaves the EU. The city has approximately 60,000 full time students and two large and prestigious universities. A significant proportion of these students are from other EU nations. They bring money into the country, and the local economy, as well as the universities being major employers.
- Employment: there is a lot of rhetoric in the press about migrant workers being on low pay, claiming benefits etc.. Our experience has been far from this stereotype. We have found migrant workers to be extremely well educated, hard working, and an asset to UK business. The EU freedom of movement is often cited by critics as a reason to leave the EU. However, the likely impact of reduced migrant numbers, would be a harder environment for UK employers to recruit.