+44 (0)1527 895 020

Navigating the minefield of Brexit uncertainty

Share this  

‘The United Kingdom’s post-Brexit future is uncertain. But one thing is clear: boosting economic growth will depend heavily on addressing long-standing productivity challenges.’ (McKinsey & Company, 2016)

An uncertain short-term future

The short-term concerns for retailers surrounding Brexit are of course well known. As much as ‘known unknowns’ can be.

Without doubt, the looming prospect of a No Deal Brexit is sure to bring in its wake a chaotic and seismic adjustment period affecting the supply chain, trade tariffs, import and export of goods, legislation, profitability, productivity and ultimately the customer offer. These fears compound the fact that the UK already has the second-lowest national productivity among G-7 countries, well behind Germany and the United States.

In a May 2019 article, McKinsey & Company highlight supply chain logistics as a crucial focus for UK companies in the face of these uncertainties:

‘UK companies can and should see the current high-uncertainty environment as a spur to rethink their supply chain strategies and make them more resilient.’

Only established retail productivity experts such as SWL are ready to advise and equip their customers with the tools and knowledge to tackle the diverse, complex and far-reaching effects that any exit from the EU will bring.

Does leaving the EU offer us ‘new freedoms’?

However, not all of these long-term effects appear to be hazardous to productivity and profitability. McKinsey & Company’s insightful article, ‘Productivity – the route to Brexit success’ (2016) highlighted issues and opportunities that are as evident now as they were in the year the fateful votes were cast.

Some of the key questions the paper raises could bring glimmers of optimism. The UK’s ‘greatest opportunity may lie in increasing economic engagement, especially trade, with the rest of the world. Britain could be released from Europe’s common external tariff and be free to negotiate its own trade agreements.’ For example, according to an International Monetary Fund study, if any new free-trade agreements succeeded in reducing tariffs to zero, this could lead to productivity gains worth more than 0.6 percent of GDP. Similarly, removing tariff barriers between the European Union and United States could translate into a 0.9 percent boost to GDP. Further, a reduction in import tariffs could provide UK consumers and businesses with ‘lower-cost and better-quality imports, generate increased competition, and stimulate innovation.’

Making Brexit work for business

The paper further stresses the important message on potential Brexit-related staffing issues, central to SWL’s expertise: ‘Improve workforce productivity to mitigate upward wage pressures. After Brexit, a reduction in immigration is likely to make labour more expensive. To counter this, companies should streamline their operations and deploy talent carefully. Companies can gauge their productivity and look for improvements using the “How Good Is Your Business Really” tool, developed by the Sir Charlie Mayfield productivity movement.’

Other benefits could come through targeted deregulation and the harmonising of product standards, licensing, or other regulations, with non-EU trading partners.

Making up the shortfall will require addressing the United Kingdom’s long-standing productivity challenge. McKinsey & Company believes that collectively, ‘there is an opportunity worth at least £250 billion per year, or more than 10 percent of the United Kingdom’s GDP.’

For more detail on this excellent paper, go to https://www.mckinsey.com/featured-insights/europe/productivity-the-route-to-brexit-success

McKinsey’s latest Brexit-related article focuses on the challenges to supply chain logistics: https://www.mckinsey.com/featured-insights/europe/brexit-the-bigger-picture-rethinking-supply-chains-in-a-time-of-uncertainty

SWL are productivity improvement specialists. Call us today on 01527 895020 to arrange a discussion on how SWL can help you to operate more productively in the face of Brexit uncertainties.

Contact SWL

Back

Share this