In the week since the EU referendum result, I've spoken with several UK investment promotion agencies and businesses, and heard the full range of post-Brexit concerns. Extreme economic and political uncertainty is putting business investment plans on hold. Companies are concerned about EU market access, retaining EU national workers (at both the 'knowledge' and lower skilled ends of the scale) and their places in supply chains that cut across EU national borders.
Just a couple of days ago, I was convinced that the post-Brexit settlement would inevitably involve the UK accepting free movement of labour in return for access to the single market - politicians, I thought, would baulk at the economic consequences of pulling out. Yesterday, though, politicians from across the spectrum emphasised the primary importance of controlling immigration - even if that meant UK companies paying tariffs to access the EU market. I, for one, am sceptical that under this scenario barriers to dealing with the EU would be as straightword as small EU duties on imports from the UK.
So, the only thing we can be certain of right now is uncertainty. Isn't it inevitable, therefore, the UK investment promotion agencies will be plunged into a state of paralysis?
When I thought about this, I was reminded of a related economic crisis, 24 years ago. At lunchtime on 16th September 1992, I found myself in a Derbyshire pub watching the ERM crisis unfold on a TV screen. There was shock as the UK government increased interest rates rapidly from 10% (already high!) to 15% - for some it meant impossible mortgage repayments. Then a lighthearted fatalism set in. 'I'm done for' was the common sentiment. 'But why worry - we're all done for! Get another round in!'
In the end, the sky didn't fall in after Black Wednesday; it tends not to. With the usual caveats (war, most obviously) worst case scenarios tend not to come about.
For post-Brexit UK, a number of scenarios are possible - conceding on immigration and staying in the single market; restricting immigration and accepting barriers to EU trade. But even if that happens, other features of the UK's business environment are likely to remain advantageous to businesses, or could change in their favour: corporation tax; bureaucracy and regulations; the value of the pound.
Whatever happens, UK investment promotion agencies will be dealt a hand of cards - some good, some less so - that they will need to turn into distinctive, compelling Inward Investment Value Propositions for businesses. And it's highly unlikely that the hand will be all bad - in the world's fifth largest economy, potentially winning value propositions will still be there.
Right at this moment, there are several aspects of these value propositions that have big question marks against them - most obviously relating to EU market access. But equally, there are several elements that agencies can develop, refine and back up with the latest data, in readiness for the less uncertain business climate that will inevitably come - their industry clusters, labour force profiles, knowledge bases and property solutions. As always, the answer to a challenging competitive environment is to identify strengths and value, and communicate them to target businesses as effectively as possible.
Download Clarity's E-Book, The Inward Investment Marketing System: learn more about developing and communicating outstanding Inward Investment Value Propositions.
The other priority for inward investment agencies should be to stay close to their incumbent businesses, especially those with overseas ownership. Identify their concerns and potential risks; do everything possible to support local management teams and help them to make the case for retaining and expanding UK operations. Again, high-quality facts and data about your location's advantages are key. But so are creative solutions and local network building, in areas including skills development and planning.
As is so often the case with companies during tough economic times, many of the consequences of this shock could, ultimately, be positive for UK investment promotion agencies - sharper value propositions, better data, improved sales and marketing practices and stronger relationships with businesses. All of which will reap rewards when the uncertaintly is finally over.
Author:
Nick Smillie
MD, Clarity Business Strategies Ltd.
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