Brexit advocacy: the importance and legitimacy of engagement by internationally operating business and investors
Internationally operating businesses and investors are experienced and well equipped to deal with risk: for example establishing internal processes and seeking external counsel to manage operational, market and regulatory risk. But when it comes to political risk, many business leaders are wary of intervening for fear of making matters worse. Brexit is an perfect example of when businesses have a legitimate and important role in creating a dialogue with policymakers. This political process will likely have direct (or at the very least an indirect) consequences on many firms’activities and investments in Europe; as such it is appropriate and legitimate to consider engaging with politicians.
Communicating messages in a politically-charged environment is a skilful art rather than a precise science. One tip for firms considering advocacy on Brexit: keep your high level messages simple and non-political; but don’t shy away from presenting politicians with the facts regarding the consequences of their decisions. For example, it might be useful to remind politicians on both sides that for business Brexit is not about achieving a win/win scenario but rather about mitigating the risks associated with a lose/lose outcome.
Brexit will result in re-instating rather than removing barriers to trade; detaching a large market from the most highly integrated and regulated single market on the planet. Business – particularly international business with “skin in the game” in Europe – is well placed to reiterate to EU and UK policymakers the importance of integrated, international markets and global standards to trade flows, economic prosperity, jobs & growth etc. Brexit will mean less integration and more uncertainty regarding the regulatory regime, irrespective of the final outcome: the status quo ex ante will not prevail whether the negotiations succeed or fail. The vast majority of businesses see this more as a threat than an opportunity. Politicians ought to be reminded of this.
Given this context, business should be encouraged to consider articulating a non-threatening, non-political narrative to policymakers. Reminding the EU that “punishing” the UK would actually result in a significant step back for integration, which will hurt the EU economy and project as well as the UK (albeit to differing extents, perhaps). This could be through supply chain disruption, risk of increased financial instability or lower levels of foreign direct investment.
Equally, reminding the U.K. that delivering on“Global Britain”means embracing, not jeopardising, international standards and market regulatory integration. Erecting new trade barriers and creating new parallel governance/regulatory structures merely increases regulatory burdens and costs for business rather than reducing them, diverting investment away from more productive uses.
Brexit will be a political process with a political compromise at the end of it (or worse from a business perspective: no deal at all/an uncertain, disorderly Brexit). As such, it is entirely legitimate that businesses make their case to EU and UK policymakers alike regarding what they see as the associated economic, political and investment impacts and costs of Brexit.
Whatever the outcome of the negotiations, there’s a key role for business leaders in ensuring policymakers are aware of the potential consequences of their political negotiations and subsequent decisions. It’s ultimately up to the politicians to decide to listen and act upon the advice or not. But business should not be deterred from giving advice if they believe their interests and values are affected by Brexit.
By Mark Foster. For more on Kreab, click here.