Britain is heading into the unknown. The UK has been on a path to ever closer relationship with its European partners since 1973, but after a landslide victory by the Conservatives last week the focus and the UK economy is about to make a sharp right turn and people are nervous.
Despite a campaign filled with untruths and misleading statements, Britain has now convincingly voted to give Boris Johnson the power to take the UK out of the European Union, which he is expected to do within the next month. Brexit will give UK companies more freedom to trade around the world, but many fear this benefit will be overshadowed by the effect of the reduced access British firms will have to the EU’s single market come 2020.
The future trading agreement is yet to be agreed between the UK and the EU, and the consequences of the break on UK manufacturing, services, and London’s financial markets remains confusingly unknown. The hard Brexit previously supported by Boris Johnson and his friends in the European Research Group (ERG) is predicted to have dire consequences for many British industries, but with the Conservative Party winning seats in the country’s manufacturing heartland, the party may pivot to a softer stance to protect the jobs of its new-found voters.
Nonetheless, the fact that the Tories have won a majority means that Brexit is now almost certain to happen, and this has resulted in a spike of both individuals and companies looking to relocate abroad. Google Trends shows that people are looking for information about “moving to Canada” and “moving to Germany” in the wake of Brexit certainty, but if recent advertising campaigns are anything to go by, then the choices for businesses seem to be more often to move to another European country such as the Netherlands, Estonia, or Romania, or further abroad to places like Singapore.
Estonia has made it particularly easy for firms with operations located anywhere in the world to base their company in the small Baltic EU state. And other EU nations like Romania have also started to look to attract UK businesses, although the setup process is more complex there and would require an experienced team of Romanian lawyers rather than submitting a simple online form. Nonetheless, even when retaining a team of corporate lawyers in the country, the fees remain competitive and some firms, such as Darie & Manea, will aid the moving process by helping firms setup virtual offices in Bucharest. Meanwhile, firms that do not want to face tough EU regulations and avoid the chaos of a post-Brexit Britain are increasingly looking at how to start a company in Singapore.
Earlier this year, research from the Institute of Directors (IoD) found that nearly a third of UK companies were looking into shifting their company abroad and ten per cent had already started the move. And for those that decide not to move the whole company, many will also be considering whether to set up a branch office in another country to give themselves the best chance of weathering the upcoming economic storm.
The “global Britain” advertised by the 2016 Leave campaign may come to fruition within the next couple of decades, but businesses need to plan for next month and next year. Without any information about the UK’s future trading relationship with its biggest partner available, it is unsurprising that people are exploring other options for their future. The difficulty for the UK will be that if enough companies move their operations abroad, the road towards prosperity outside the EU will become even harder.