One Year Later: Voices from Brexit’s Front Lines
Four companies, four Brexit experiences. A year after Britain voted to leave the European Union, the chiefs of the firms Bloomberg is tracking talk about the last 12 months and what they see ahead. One was and is pro-Brexit, three thought it was a bad idea. All are concerned about the uncertainty clouding the process and all just want to get on with it.
Read the first part of On Brexit’s Front Lines:
- James Meekings is the co-founder and U.K. managing director of London-based Funding Circle, Britain’s largest peer-to-peer lender. It matches investors with thousands of small businesses around Europe.
- John Elliott is founder and chairman of Ebac Ltd., which makes water coolers, dehumidifiers and washing machines in the northeast of England.
- Mark Gorton is the joint managing director of Traditional Norfolk Poultry. The company sells five million free-range and organic birds a year on farms in the countryside northeast of London.
- Alasdair Pettigrew is the chief executive officer of Boxarr Ltd., a startup that builds software for complex engineering and manufacturing projects from its base in western England.
How have things gone for your company since the vote?
Meekings: We’ve seen more businesses than ever coming to us. In the first quarter we originated 327 million pounds ($414 million) in loans, an 80 percent increase from the same period in 2016.
Elliott: We’re due to complete a new order for 5,000 premium water coolers from a major U.S. company. They want us to quote them a price for a new mainstream model too. Elis in France has been our customer for a long time. They also want us to quote them for the next generation of water cooler.
Gorton: It costs us more money to feed our chickens and turkeys, and we have to recover that money from somewhere. It’s been tough. Our margins have dropped. Top line is still growing, but our bottom line is getting squeezed. The biggest practical issue we have now is difficulty recruiting staff. Every week we have a meeting and say let’s employ more locals but they’re just not there.
Pettigrew: We’ve taken on new customers, which is fantastic. We got our first position in the automotive industry which is a huge step for us. We’ve fallen a bit short on revenue from where we’d like to be, which I think is just the nature of the marketplace being still quite uncertain globally. I think inevitably even with the best capability in the world it causes procurement cycles to be longer than you’d like them to be. It causes people to pause.
How do you feel the country has gone since then?
Meekings: The outcome of the general election showed a lot of pushback from people who didn’t support Brexit. There could be a softer Brexit, which would be very good for business, so I am hoping the government’s leadership changes its approach. Access to the single market is something we would like to see.
Elliott: Nothing’s really changed. The status quo is not good enough. We keep borrowing money. We’re living beyond our means. Politics, at the moment, is pathetic.
Gorton: There are a lot of people who voted to leave purely on the immigration card. Around here you have lots of towns with big east European populations. They do create a bit of havoc. But they didn’t think about what happens to the NHS, and how much money am I going to get when I go on holiday or how much money am I spending in the supermarket. Now they are thinking about all that.
Pettigrew: People are starting to feel the pinch from the inevitable inflation coming through, and that’s making it difficult for companies to increase their pay. That is going to affect the economy and we’re seeing it come through now. How big a problem that will be remains to be seen, but it’s going to be tough for the U.K. economy.
What are your concerns about the future?
Meekings: The European Investment Bank was putting so much money through the U.K. economy by supporting small companies. That’s why you see the British Business Bank stepping up with money for small businesses (to replace it). That needs to continue because if it doesn’t, access to finance could be more challenging for British companies and GDP will lag other European countries.
Elliott: I think exit negotiations will get bogged down for a long time. We won’t do a very good job of it. We need a new party of business people.
Gorton: Our costs have stabilized at the new levels, but labor is the biggest concern. One of the big things that’s hit us in the last six months is bird flu. It’s had a big impact on our business. Yesterday I got an email about what Brussels is going to do about bird flu and I thought, good. Then I thought, hang on a minute, we’re coming out in two years and we won’t be a part of that.
Pettigrew: It would just be a catastrophe if the government tightened up on immigration to the extent that we couldn’t get the right people into the business from a global pool. Inevitably we’re going to grow our business, so if that means we have to set up development capability or other skills overseas because we can’t bring talent here, I think the country will suffer the consequences of that. If every business takes that outlook, then inevitably the economy’s going to suffer.
Do you still think Brexit will happen?
Meekings: I think it’s going to take longer now, there will be more conversations, and the risk of it not getting done in the two-year horizon has increased. But the idea of it collapsing and not happening? That’s unlikely. It’s just a matter of timing.
Elliott: I can’t see any progress. We’ll get there in the end, but we’re in a bit of a mess now. Over 80 percent of the population voted for a party that wants to leave the EU. We should just get on with it. A lot of Remainers I know are saying let’s get on with it. People now think it’s not going to be as bad as we thought. It was supposed to be the end of the world.
Gorton: There’s more talk now of a soft Brexit. We’ve got to have our labor. They have to agree something on that. We’ve got to trade with Europe. It would be ridiculous to stop trading and not agree a trade deal. It might happen in some way that we might not notice too much difference. This factory is an EU approved factory which means we can export to anywhere in the EU. I can’t think why that would change. It would be crazy.
Pettigrew: I think in two or three years’ time we could be sat here saying, ‘so when’s this Brexit thing going to happen?’ That is a possibility. But I think there’s going to be a point in time at which the British people say come on, let’s get on with it, and the rest of the EU says the same thing.