Andy Naylor, MD of Connect, discusses the effect of Brexit on Recruitment and Consumer sectors
Wednesday 29th March was the day that Theresa May triggered article 50, and thus formally commenced Britain’s exit from the European Union.
Andy Naylor, Managing Director of Connect Search, discusses the effect of the Brexit decision from his perspective. Looking back on the nine months that have passed since the referendum result in June, he analyses how the decision has affected and will continue to affect the key markets in which Connect operates, and the recruitment industry as a whole.
Andy, what was your initial reaction to the news that Britain had voted to leave the European Union?
I was initially surprised as the polls had suggested the remain vote was heading for a marginal win, which I suppose demonstrates how little we should rely on polls these days. I voted remain and once the result had sunk in, I think my reaction was the same as most people – what does it mean and what happens next?
I don’t think the campaign management from either side did modern politics’ image any favours, but I’m an optimist, and despite what I saw as scaremongering and a lack of clear detail and fact throughout the campaign, I firmly believe there are significant opportunities to be had from exiting the EU.
You operate within the food, personal care, pharmaceutical and retail sectors on a global scale, have you noticed an impact on these sectors, be it in the UK or internationally, in the nine months since the referendum?
In a word, no. It would seem it is too early for businesses in the consumer sectors in which we operate to make snap decisions on long term strategy, particularly before article 50 was triggered. There will undoubtedly be change and impact over time but I think that for every negative impact on the UK economy, there will be opportunities available that will offset any downside.
Most of our clients already operate across multiple international territories and are used to the challenges of adapting to different legal, financial, and cultural requirements, so any impact from Brexit is likely to be an extension of complexities already faced. In Retail, Personal Care, and Consumer Healthcare sectors especially, the impact of eCommerce and opportunities in emerging markets has driven the need for companies to be agile in responding to change, complexity, and opportunity.
Have you noticed an impact on the recruitment industry as a whole? Has the decision had an effect on Connect itself?
Some reports point to uncertainty hitting business confidence and of course the value of the pound has dropped 10-15% in trading against the Euro and Dollar. However, this has had a positive impact on UK manufacturing whilst GDP increased slightly in Q4 2016 and the FTSE has seen a particularly positive bounce.
Such statistics suggest there will be a predictable mix of opportunities and threats to the recruitment industry in future, and that they will only become clear once the impact of negotiations over the next 2 years takes effect.
Despite the obvious rumours of impact on the financial services sector, a recent poll of 300 UK and European recruitment businesses suggested Brexit has been met with a sense of optimism and that over the next 2 years the expectation was for revenue and placement volumes to increase.
These findings also reflect the experience of Connect, who operate extensively across Europe as well as US and Asia Pacific markets. We have continued to build new and existing relationships since the Brexit vote and our growth plans within the EU and other global markets remain unchanged.
We will keep a close eye on developments as negotiations progress but the business as usual approach combined with the continual need to adapt and evolve in all of our international markets, is the path we are following.
As the negotiations get underway, from your perspective, what are the most important deals to be made?
From a business perspective, the re-calibration of our trading relationship with the single market could have an enormous impact on our economic performance within the EU. The trade issue is at the heart of Brexit negotiations and will go a long way to determining how capable the UK Government and the European Council are of agreeing a solution that is economically and politically acceptable for all parties.
The other key trade deal involves passporting rights and the potential impact on the financial services sector. Failure to secure these rights could force UK companies to be based in a single market country, with particular impact on London’s status as a global financial hub.
Other key issues that will have a lifestyle as well as economic impact include freedom of movement, immigration, and the status of existing residents and these are just some of the subjects under discussion. The complexity is enormous but I think the key to the next 2 years providing the most positive outcome, is for the parties involved to communicate clearly with business and the public to ensure that at the very least we fully understand the new world order.
What do you predict will be the future situation for the consumer sectors in which you operate, as well as Connect itself, once Britain has officially exited the EU?
I think businesses across all sectors will have to learn to adapt to a slightly different world but I don’t think this needs to be a daunting or intimidating process. Running a business is synonymous with change and adaptation, and once we all understand what changes will be required, I strongly believe the opportunities on offer will be exciting and transformational for many businesses across the consumer sector and the recruitment industry.
One obvious opportunity, which fits well with the strategy of Connect, is the potential to focus more on international territories outside the EU. This is not to say that current single market countries will become any less important, and I hope that one of the outputs of the negotiation process is that the UK’s relationship with the EU remains strong and vital to all parties. However, I think the greatest benefit of Brexit will turn out to be the impact it has on our view of the world as a whole and the opportunities that exist both in and outside the EU.
Whatever decisions are made as the UK leaves the EU, I’m confident Connect is in an outstanding position to support clients across consumer sectors. We expect some businesses to make bold decisions regarding head office, manufacturing and supply chain locations and with recent assignments successfully concluded in US, Russia, Asia Pacific and across EU countries, our main focus is continuing to build the knowledge, expertise and track-record to support clients as they develop and implement company strategy.