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Author's profile photo Elizabeth Maffei

The Brexit Effect

Doing nothing can be a remarkably rewarding thing, for example when I did a click n collect no show at John Lewis for something I realised I don’t need, JL auto-refunded me the product cost. However, with Brexit doing nothing and getting No Deal might not have such a happy outcome. Or perhaps it will all be fine … who knows? Even though Parliament’s been prorogued – something most of its members isn’t taking lying down – we may still get a Boris Brexit which may, or may not, be a No Deal Brexit.

Whatever, hopefully the uncertainty will end soon and that’s good news for businesses. In the absence of any concrete information about what Brexit will look like and when (or if) it will happen businesses have applied the reverse of the classic supply chain dictum by substituting inventory for information. Those businesses with better supply chain and supplier risk management will have been able to make the best out of a bad situation by more easily being able to shift to a less-risky supply allocation via visibility across their entire eco-system. Nevertheless when there is uncertainty, Brexit related or otherwise, keeping working capital flowing – not tied up in inventory – and getting the right products in the right place at the right time at the right cost, is harder than usual.

It is difficult to tell what will happen next. If we do get a Boris Brexit there are some clues as to what it will look like. An interview he gave 19 years ago when he was starting out in politics and talking to a school (not my school!), radio station offers some pointers. I’m assuming that on more or less day one and with a less than John Humphrys’ intensity grilling there must be some authenticity in this recording. If you listen from 16:50 you hear the MP observe “We get a bit hysterical about Europe … where it all goes wrong is where you start trying to create a single country …”. In summary it’s not Europeans it’s Europe, the political institution which is the problem. We still have centre ground in the UK – a good chunk of which needs to be captured for a parliamentary majority. This approach could enable him to keep the right wing of his Conservative Party happy with a No Deal Brexit while body swerving away from the xenophobes and, therefore being able to pitch his policy tent much nearer the centre ground, for example with announcements like this.

If that is the plan, will it survive contact with the enemy? Enemy, in this context, meaning economic reality; the economic reality of being the world’s 5th largest economy with, potential slippage to 7th place. The extent to which the UK will be geopolitically hamstrung by the economic travails of having cut itself a drift from the world’s largest trading block is a related matter and the subject of much speculation. The cynic in me can’t help remembering the announcement, more than 20 years ago, of the erstwhile perfidious Albion’s foreign policy with an ethical dimension which didn’t survive its exponent’s tenure as Foreign Secretary. It has been said before and is still nearly true: Plus ça change … but relative GDP isn’t the same as it used to be and causing upset is easier to get away with when you’re not tumbling down the global GDP rankings. Plan B could be to fall back on superlative diplomatic finesse to give dealings with the UK that perfidity-free feeling. Given our new PM’s diplomatic performance when Foreign Secretary I feel a plan C may be required. Whatever plan C might look like as far as trade is concerned the clothing sector tops the IFS’s list of affected industries. As if things weren’t tough enough already for the UK retail sector.

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