brexit


Does Brexit mean the same ... to businesses in Bournemouth as to companies in Cornwall?


Different regions will experience very different Brexits depending on their industries, trade and workforce. Despite that, having a ‘good’ or ‘bad’ Brexit remains in a region’s own hands and every region in Britain should review their strategy in the light of Brexit, writes Mark Essex, director of public policy and author of KPMG’s weekly Brexit Column


If regions follow that advice, we will see an increasingly varied Britain. That means where a company bases itself within the UK could have as much impact on their long-term exposure to Brexit as relocating outside the UK completely.


So far, the impact on companies has been mixed in regional terms. Colleagues across the country report clients’ fears and pain at higher import costs but also tell me of companies ‘flying’; the weaker pound prices out foreign competition, boosts exports and tourist dollars – important for the South Coast region – and raises the allure of their clients to foreign buyers.


Some regions will be more nervous. A study by think-tank Centre for Cities pointed out that Exeter, Plymouth and Bristol depended on EU markets for between 65% and 70% of their exports. By contrast, Ipswich, Hull and Derby did as little as a quarter of their export business with the EU.


How should regions respond? In other countries, regions compete with each other on price – for example, reducing corporate tax rates and paying tactical subsidies – to attract investors and customers. But just as price wars break out between commercial rivals, ultimately there is only one way to win a competition based on price and the result is not appealing for regions nor the exchequer. Differentiating one’s offer is a more resilient long-term strategy.


Don’t waste a good crisis Regions should grab the opportunity of Brexit


to accelerate their efforts to differentiate and market themselves: identify where they are strongest, what they are famous for, where they have an edge in terms of workforce, location or infrastructure … and then go out and sell themselves under that banner.


This more activist role for local government struck me on a recent visit to Norwich. Council leaders there are easing off on references to their “cathedral city” and are using their proximity to Cambridge to position Norwich as part of the burgeoning ‘Silicon Fen’ cluster. Or take Hull: by linking the technical focus of its university with local offshore wind experts it has created a national hub for this renewable sector (and one of the least geared to EU exports, according to the Centre for Cities study). Specialisation is a powerful tool for regions.


For some regions the strategy will need appropriate investment in infrastructure, skills, academic links and so on. But this is not simply an appeal for more funds from central or local government. It relies just as much on bold decision-making and an imaginative approach to alternative sources of finance and funding. The emergence of East London’s Silicon Roundabout was not primarily a story of money. It involved a group of like-minded start-ups whose clustering together encouraged the free movement of ideas, talent and capital.


For Britain’s regional leaders, the task is for some hard-headed reflection about their strengths and weaknesses as they prepare to enter a more competitive global market.


THE BUSINESS MAGAZINE – SOLENT & SOUTH COAST – MARCH/APRIL 2017


For businesses, the challenge is also to ask themselves some searching questions. They may be rooted to the British Isles because of their customer base or simply through history and inclination. But that doesn’t mean the start and end of a location strategy review. As companies prepare to compete outside the Single Market, locating themselves in the right part of the UK – surrounded by the best infrastructure, people, ideas and partners they can find – could mean the difference between a good Brexit and a bad Brexit.


KPMG’s weekly Brexit Column is published on kpmg.co.uk


KPMG on the South Coast is a professional services firm with experts in tax and audit, as well advisory consultants.


For advice on how to make the most of the opportunities Brexit presents, and navigate the challenges, contact Dave Harris, associate partner and Brexit expert for KPMG on the South Coast.


davidtax.harris@kpmg.co.uk 07901 613584


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