I’ve been asked by quite a few people to write a note on Brexit. It’s a difficult issue to write about as Move Fresh takes a completely politically neutral view and Brexit is a very political subject on which people have very strong views.
As a company, Kevin and I have taken a view that we should not get involved in political issues. This because a) taking a political view annoys a large number of customers and investors and b) although we are pretty good at running a business that skill is not necessarily transferrable into political subjects. Just because someone knows how to make a lot of money does not qualify them to make pronouncements on the big issues of the day.
Which also brings me on to the subject that what is good for business is not always good for society. A classic example would be the Equal Pay Act 1970 which required companies to increase women’s pay to being the same rate as men who were doing the same job. Nobody today would argue against this. However it was bad for business at the time as it resulted in an increased cost but clearly was a great thing for society as a whole.
Taking a view on Brexit is mainly about making a prediction about the future. As Yogi Berra, the baseball star for non-Americans, said “It’s tough to make predictions, especially about the future.”
It is even harder to make a prediction about the future when i) you do not know what the UK government wants and ii) you do do not know if whatever they may want is achievable.
However what we do know is that somewhere in the region of 70% of the UK economy is dependent to a lesser extent (tariffs) or a greater extent (being prevented completely from operating) on membership of the EU. If we assume for the sake of argument that Brexit will ultimately be economically a good thing we have the issue that we have to move from a situation where 70% of the UK economy depends on the EU to a situation where 0% of the UK economy depends on the EU.
So, if Brexit ultimately turns out to be a good thing then we still need to handle a migration of 70% of the economy away from depending on EU membership. It is very difficult to envisage a way this could happen without it being at least a short term negative, unless there was a very lengthy 5-10 year transition period which has been ruled out by both the EU and the UK government.
A way to think about this would be that the set of opportunities for business outside the EU may be greater than the set of opportunities for businesses inside the EU but the intersection between the two sets is small. Therefore many businesses may fail today, even if the future opportunity is better.
So in summary, Brexit looks like a short term negative with the long term being either negative or positive depending on what policy the government decides to adopt and whether or not that policy is achievable.
The only political point I will make is that for Move Fresh we would appreciate greater clarity on what the UK government’s position is so that we can plan the future.