Brexit means Brexit, but what does it mean for Thames Valley businesses?


Despite prime minister Theresa May’s mantra that ‘Brexit means Brexit’ there is no clarity yet of what Brexit will actually mean for businesses and how they can plan for the future. We are very much on a journey into the unknown … but judging by the mood of our contributors, a journey of optimistic trepidation.

Thames Valley Berkshire LEP director Robin Barnes spoke for many when he commented: “While political uncertainties prevail and the global economy continues to fluctuate, it simply has to be business as usual for our LEP.”

The LEP will press ahead with implementation of its Strategic Economic Plan in order to sustain the Thames Valley Berkshire economy, he added.

Adrian Dray added: “Nobody knows what outside the EU means – there are so many potential different outcomes.”  Quercus continues to talk to its clients and international partners to gauge sentiment, but “. . our own medium-term investment plans have not changed and we are continuing to complete deals post-Brexit.”

As chairman of a corporate and commercial catering company, Tim Jones highlighted that the future for the service sector largely depended upon the post-Brexit success of clients across the business and industry spectrum.

Helping clients to build sales and control costs would place everyone in a stronger position to ride any storm. CH & Co Group is currently working closely with suppliers to limit or negate any inflationary impact caused by Brexit currency fluctuations.

Looking forward, talent retention and investment in improved infrastructure came top of the Brexit agenda for most of our respondents.

Brexit means the search for talent could get harder

Increased UK immigration control could be doubly damaging for the economy – with fewer potential talented recruits coming from abroad, and the risk of talent migration from the UK.

Barnes, currently leading the LEP’s Berkshire Future Talent initiative, explained why our local sub-region is one of those most vulnerable to immigration controls*: “Thames Valley Berkshire LEP is a high growth area with an increase in jobs of 9,900 between 2004-2014 and net international migration being 37,720.

“However, the Thames Valley is dependent on migrant workers and has low rates of unemployed local UK workers, hence would struggle to recruit from the local labour pool without poaching staff from other businesses. In the area, 14% of jobs are occupied by non-UK nationals and there is a 4% unemployment rate at present.”

(*Independent research by Regeneris on Brexit immigration implications)

Jones highlighted: “Given how much the hospitality industry relies on EU labour, finding quality staff will become a major challenge post-Brexit without labour movement.  There just aren’t the numbers of UK employees available to fulfill  industry needs.”

UK start-up companies are already aware of visa requirement and bureaucracy difficulties connected with non-EU staffing, said business incubator head Roy Azoulay. “Fees have significantly and steadily increased across all application categories, and UK Visas and Immigration is notoriously difficult to deal with. If this becomes the case for EU staff as well, it will be a deadly blow.

“Corporates may have the tools and resources to support attractive candidates through it. Start-ups do not and will lose attractive candidates to EU startup hubs.” Any new UK immigration policy needs to provide an efficient and cost-effective process, he urged.

Noting that the UK’s successful economy had historically been achieved by inherent UK innovation and invention combining with knowledge sharing, collaboration, and talent from overseas partners, Dray stressed: “We have to have an immigration policy that makes it easy for the UK to get that talent into our economy, wherever it comes from.”

“Talent is the greatest bottleneck for innovation and the consequences of Brexit will be dire if every attempt is not made to minimise damage,” added Azoulay.

Brexit means fresh risks to overcome

Some respondents felt a key risk to the UK, and the Thames Valley in particular, was international companies reducing their UK investment, or even relocating outside the UK.

The Berkshire economy is currently worth over £34 billion to UK plc and has the highest proportion of foreign-owned businesses in England. These roughly account for 25% of all employment and 50% of the sub-region’s overall turnover.

“Retention and recruitment of these businesses is more critical than ever; not only to secure their economic contribution but also to sustain the supply chain they share with other, smaller businesses,” said the LEP’s Barnes.

“We need to ensure that Berkshire remains a key business relocation destination based on the continuing strength of our world-leading business clusters.”

Corporate finance adviser Dray mentioned: “We initially saw a short-term hiatus on decision-making, particularly from US businesses investing into the UK.  There are now some signs this hiatus may be over, but if it were to remain, the smaller the buyer population for the businesses we are selling.”

Thomson noted signs that Brexit had sparked doubts and potential political contagion within the EU, which could affect Europe’s economic stability and, in turn, global trading.  Within his dealmaking sector, specific risks were major financial operations moving abroad and a tightening of financial debt markets.

Speaking for business start-ups, Azoulay commented: “We wait to see the effects of Brexit in terms of angel, seed and A-round funding.”

Barnes added some funding reassurance: “The Government has now agreed* that all multi-year projects administered by government with signed contracts or funding agreements in place, and projects to be signed in the ordinary course of business before the Autumn Statement (November 23), will be fully funded, even when these projects continue beyond the UK’s departure from the EU.”

This meant Horizon 2020 research funding, important to the University of Reading, and current agricultural funding in our rural communities will be guaranteed up to 2020.

“What’s less clear is what will happen to all those projects in the pipeline that will not be signed before the Autumn Statement, and after we have actually left the EU.” The LEP will continue to seek clarity, Barnes stated.

*August 13: Chancellor of Exchequer statement on European Structural & Investment Fund

Brexit means building afresh

Barnes, Dray, Jones and Thomson all focused on the need to commit, finance and improve UK infrastructure, particularly major projects such as Heathrow’s proposed expansion.

With the Thames Valley Berkshire LEP’s latest £174m Growth Deal proposal submitted to government for funding, Barnes called for recognition: “Now is the time to invest in a real economic powerhouse.”

He urged rapid government action to implement a new Heathrow runway and Western Rail Link to Heathrow, with their acknowledged economic benefits and national strategic infrastructure significance. The CBI has evaluated that failure to have a new runway by 2030 could cost the UK £5.3b a year in lost trade to BRIC economies alone, he noted.

Heathrow is not only the UK’s global gateway. It is the country’s biggest port, handling over a quarter of all exports by value – literally, the UK’s bridge to the world of business.

“A swift decision to a third runway investment at Heathrow would strengthen the UK’s negotiating position on global trade deals,” Barnes added.

Jones stated: “Heathrow or Gatwick, a decision must be made very soon. The issue has been going on for years and it’s very damaging to business, our country’s reputation, and continual delay impacts on investment decisions.” 

He suggested: “Rather than pouring more money into the banking system, the Government should invest in major infrastructure projects that are vital to the economy and future growth – it would be a more direct way of pumping money back into the economy.”

Dray agreed: “Brexit means the UK needs to be an easier place to do business. Therefore, investing in infrastructure to make transport links easier into and throughout the UK is even more important.  The argument to invest in projects such as Heathrow and HS2 is now more powerful, without even factoring the positive impact they should have on the UK itself.”

The recent government green-light for Hinckley Point will have pleased Thomson who supported that important project.

Dray also proposed: “The Government should make the UK a great place to do business and to invest in. Encourage more entrepreneurs to invest in their businesses and take risks now. In addition, take what is good about the EU – the common market; the common labour force (which is different to the free movement of people); and key European legislation that makes a fundamental difference to consumers, the environment and individuals – get rid of the rest.

“Make it simple to invest, raise money, take risks and make money.”

Brexit freedoms mean opportunities

“Yes there are opportunities but it is impossible to know where the best opportunities lie at this moment in time,” remarked Dray.

Brexit had thrown-up a series of fresh future issues and potential variables, alongside existing and ‘normal’ business challenges.

Dray and Thomson agreed that proven professional services and well-informed advice will be in demand pre- and post-Brexit as clients look for guidance, support and opinion on strategy and investment decisions.

“Clear, concise advice is more valuable than it has ever been,” stated Dray.

Altered and developing debt markets would increase demand for debt advisory products, exampled Thomson.

Jones said: “Challenging or uncertain times for business can often lead to great innovation and reinvention.  If costs have to be cut, creative thinking and the development of alternative methods and solutions follow, and that can also lead to greater productivity.”   

“I believe the strongest risk is that sentiment rather than fundamentals will result in perpetuating the position that Brexit is bad for all, and particularly the UK. The leaders must look at Brexit as an opportunity for all, in and outside Europe,” added Dray.

Brexit political delay means uncertainty

Thomson feared that protracted negotiations on Brexit and UK’s new trade deals would breed uncertainty and reduce general deal activity.

A long period of uncertainty would hamper UK business, and impact decision-making for foreign inward investment, said Jones.

“As a service provider, we are inevitably affected by Brexit uncertainty among our clients and their consequent willingness to invest in catering services, refurbishments, etc.”

Jones also noted the risk of “increasingly partisan politics and their divisive impact on the country.”

Dray went further: “The lack of true leadership within the Brexit process is the greatest risk. Rightly or wrongly, a small majority of the UK electorate has made its decision and that needs to be actioned by politicians in the UK and across Europe. 

“My real concern is whether there is the depth and quality of leadership in the political institutions or will the petty bickering win over.”

Brexit means potential changes in the legal aspects of business

Sponsors of this feature, leading Thames Valley-based law firm Pennington Manches, have helpfully identified likely Brexit legal implications, and provided some business actions to consider.

Corporate and M&A

Most English corporate law is not derived from EU legislation, so, apart from EU merger control laws, corporate law is unlikely to change significantly.

Apart from merger clearances, public M&A will be largely unaffected and significant changes to the UK Takeover Code are not anticipated.

But there may be changes to specific aspects of M&A, investment transactions and capital markets.

For example, UK equity capital markets derive much of their regulatory framework from EU legislation, including the Prospectus Directive, Transparency Directive, and Market Abuse Regulation.  As a non-EU member, the UK’s capital markets regime will need to be deemed “equivalent” for UK prospectuses to receive mutual recognition in EU member states. 

Commercial relationships

Businesses should assess whether existing contracts are likely to be affected by Brexit and consider post-Brexit contract inclusions that will protect commercial positioning.


Specific rights to terminate, triggered either by Brexit or by events arising from it

Agree shorter-term contracts to avoid being tied in by unknown Brexit impacts.

Data Protection                                                                                           

New General Data Protection Regulation (GDPR) legislation is due to come into force across the EU in May 2018.

GDPR is likely to continue to be relevant post-Brexit for many UK organisations, particularly those operating internationally. Businesses should continue working towards GDPR compliance and keep up with guidance and statements from the Information Commissioners Office.

Intellectual Property (IP)

Most UK IP rights are based on EU directives implemented by UK laws. Unitary rights such as EU trademark and registered and unregistered community designs will remain valid and enforceable until Brexit.

After Brexit, it may be possible to validate them through a simple conversion procedure. But businesses trading principally in the UK with an EU trademark may wish to consider applying for a separate UK trademark to avoid potential issues and costs associated with trademark transference.

Customs duties and VAT

The UK will have to reach new trade agreements with the EU and other countries on whether and what customs duties will apply.

VAT is currently subject to EU law but will not be post-Brexit.  The UK could introduce new areas of zero-rating or otherwise amend the rules.

Employment law

Some changes are likely as Parliament will have the freedom to protect workers’ rights or remove red tape.

Three trends may emerge:

  • removal of less business-friendly legal aspects
  • loosening of employer obligations during collective redundancy consultation
  • moves to abolish Agency Workers Regulations, and possibly, reintroduction of tribunal discrimination award capping.



More details at Penningtons Manches Brexit Hub: