Brexit: Wooing wealth, EU land grab and pioneering UK SMEs

I suppose that it might be described as something of a long goodbye.

Just over a year ago, Britain voted to bid farewell to its partners in the European Union and go alone, apparently convinced that it could make a better fist of things as a sovereign nation freed of Brussels’ red tape.

As we now know, of course, any hopes which the brigades of so-called Brexiteers entertained of a swift separation have all but vanished into thin air.

Although the politicians may be still determining the preliminary details of the divorce, business is eager if not anxious to steal a march.

Companies worried about the consequences of having significant operations in London and out of Europe have already started planning their exodus.

News reports have suggested that UK-based airlines are considering the advice of the EU that they need to relocate or sell off some of their shares if they wish to continue flying within continental Europe after the terms of Brexit are ironed out.

In addition, as many as 9,000 jobs may be lost as part of a mass migration by major financial institutions.

Not surprisingly, various European states are jockeying for the right to provide the new homes for some major organisations.

Earlier this month, French efforts to persuade firms to switch to Paris were described as a “seduction”, giving the campaign by the Elysee Palace a touch of the stereotypical Gallic charms of pulp romantic fiction.

Leaving aside newsdesk interpretation of the courtship, it’s clear that the country’s Prime Minister has his eyes set on turning Paris into “Europe’s leading financial centre after Brexit” with measures including lower taxes, new international schools and even the kind of ‘soft touch’ regulation employed by Gordon Brown and colleagues to bring some banks to the UK in the first place.

It’s not only France which is making moves on benefitting from post-Brexit Britain’s loss. In the last week, 10 of Europe’s member states have gone decidedly cold on plans to introduce a financial transaction tax which has been under discussion since 2011.

The tax was mooted at a time when the dust was still settling on the recession of 2009 and the finger of blame for worldwide economic collapse was pointed squarely at the big banks.

Far be it from me to suggest that noble principles have been compromised but with jobs and investment at stake, support for the transaction tax might prove to be an obstacle in negotiations about who goes where.

We have also seen the introduction by Italy of its own ‘non-Dom’ tax regime in another transparent land grab for Europe’s wealthy individuals. This is, of course, at the same time that the UK has further dismantled the benefits of such a status in the UK.

However, whilst there is no doubt about the vast body of opinion that Brexit will have ramifications for some parts of the UK economy, I think there is one piece of good news.

More businesses confronted with even the merest potential for economic stagnation at home are realising the necessity of trying to find custom overseas.

One comprehensive study of 100 leading SMEs found that they had managed to grow exports by an average of 72 per cent a year since 2015.

Even though the electorate was desperate to consign its European adventure to the history books, businesses still seem to acknowledge the importance of trading on the continent. The same analysis found that Europe was the top destination for exports by UK SMEs.

It is more than an abstract experience too. Myself and my colleagues at Enterprise Tax Consultants have spent the last year handling enquiries from a growing number of UK firms wanting advice about the kind of tax structures which will allow them to profit from enhanced commercial ties to Europe and even further afield.

In other words, more by accident of the referendum polls than any grand design in their longer-term business plans, companies are going international.

It’s the kind of scenario which might have some individuals reckoning that Brexit wasn’t so bad after all.

 

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