A couple of people have, of late, asked why it is that it has taken so long for business to react to the Brexit fiasco. I think it's a good question. Why it is only now that we have the City, car manufacturers, Airbus and others all suggesting that they may have to leave the UK because of Brexit? And why didn't they say anything before the referendum? I offer three reasons.
The first is that big business does politics (big time), but prefers not to be seen to be doing so. As a result they hopelessly misread this one.
Second, they thought that the Leave campaign could not possibly win. They hopelessly misread that.
Third, they thought that a Tory government would be competent. They really hopelessly misread that as well.
But if you can get so many things wrong then it's also fair to ask how competent business really is? Those that think it may be are also guilty of hopelessly misreading that one.
If business has got this wrong they have only themselves to blame. They want influence. They should accept responsibility.
But we have a right to blame them as well.
It may be that most companies think about their short term profits and share prices rather than thinking about strategy and longer term thinking. Carried away by the euphoria of the right wing press and think tanks they have totally lost their vision. Airbus and the big boys are now having second thoughts at last!
I understand that some businesses were afraid of antagonising their Brexit -supporting customers.
Andrew Lugton says:
“I understand that some businesses were afraid of antagonising their Brexit -supporting customers.”
Going bust in the medium term to keep customers in the short term does rather call into question the competence of business ‘leaders’.
the CBI and TUC making a joint statement must be fairly rare. I wonder why it has not had more publicity?
Joint statement
https://www.tuc.org.uk/news/union-and-business-leaders-issue-joint-appeal-progress-brexit-negotiations
It’s not about BUSINESS. It is never about BUSINESS.
It’s about the salary, bonuses and pensions packages. Not necessarily in that order. We have never had businessmen – or women. We have rentiers.
Well, Wetherspoon Pubs (a business) WANT BREXIT – you can read so in the in-house magazines when you go to their establishments. Thank God their beer and food is of much better quality than their political opinions!
What I think we are seeing is that the EU trade deals made trade so easy (we did not really have to think about it anymore) that business and even the punter took it all for granted.
Oh well…………..
I offer another quote from Frederic Bastiat:
‘When goods do not cross borders, soldiers will’.
To a large degree a combination of ignorance and selfishness. No rational understanding of how the country’s monetary system works to justify Austerity Cuts and no capability of thinking through an economically and socially coherent Brexit Plan.
The laissez-faire business community has convinced society that it is inherently efficient – especially when compared to governments – a corollary of the claims made for Capitalism. Minsky’s insights into Capitalism in general apply in particular to many businesses, i.e. that they are congenitally unstable.
Resisting the temptation to write an essay on the topic, I would simply say that the 4 decades I spent working with and observing commercial enterprises, of all ilks across different continents, left me with the conclusion that almost all were extraordinarily inefficient, poorly led and lacking vision. The reason they survive and prosper as they do is more to do with the business school tick-box model and hierarchical management structures than genuine competence. You only have to ‘get it right’ 51% of the time to stay in the game. It is therefore no surprise that they are reacting so late to impending ‘Brexit’.
Anyone who has followed Prof. Michael Dougan of Liverpool University will have been forewarned. Doubtless there are thousands of smarter medium-to-small companies that have for some time been deeply concerned about the implications for their businesses but feel powerless. They have little or no representation at government level.
As a controversial footnote I’d add that in my experience – although there are clear and welcome exceptions – the historic standard of English senior management is lower in general than its Continental counterpart. I deduce this has a lot to do with cultural influences. Quitting the EU will probably reinforce this aspect of our economic life.
Such a good pithy comment this! Of course, why has this not been asked before? It is such a mad riddle!
Charlie Bulbeck says:
” It is such a mad riddle!…”
Wasn’t he one of the Directors of Northern Rock ? 🙂
I would suggest that it is your 3rd option: business thought that the government could not be so reckless as to have not thought through the consequences, but that is actually the case it seems. Maybe they also bought into the belief that the Conservatives are ‘the party of business’. Also, don’t underestimate the power of ‘group-think’ in large organisations, it is mighty powerful in my experience! Reading Twitter posts from actual small businesses who have explained in great detail the consequences of Brexit – in any form – I can sympathise with their fear for the future.
I still suspect that the top players in the government see it all as a game as they will not be affected in any negative way when it all goes pear-shaped really soon. In the back of my mind is the possibility that the ‘plan’ all along is to cause chaos so as to usher in a new paradigm.
A “new paradigm”, Ehh? 😐 Right.
Michael Westcombe says:
“A “new paradigm”, Ehh? Right.”
I share your scepticism, Michael.
I’m not sure there’s anyone in the Cabinet would recognise a new ‘Paradigm’. If you told them to expect one they’d be probably expecting a new model of ministerial car.
🙂
The problem for business has been that it has had to perform a balancing act between initially using soto voce warnings to government , whilst not frightening employees, dealers and customers.Thus, warnings in the run up to the referendum having been ignored, companies then felt obliged to engage in a PR blitz to reassure.Meetings with ministers were accompanied by reports of continued commitment to the UK and even announcements of fresh investment from some.The reality has been that the purse strings have remained tied and as the reality of a botched Brexit has become apparent the warnings have become more strident , to the point of being interpreted as threats by ardent Brexiters.But the reality has always been clear to students of industrial and commercial location theory.Business will locate where it can maximise profit and if a particular location can no longer satisfy that objective, then work will be relocate to places where it can.It is clear that Brexit always threatened that possibility, it is only now that the scale of that threat is becoming apparent.
Fear. They are afraid of back lash from a chunk of the population who are their customers. Take airlines and car manufactuers as good examples, if they spent a lot of time coming out with honest opinion the pro-Brexit media would go to town on them. End result it hits their profits and share price. In private their opinions may have been a bit more vocal… Airbus can be a bit more bolshy because the man on the street isn’t in the market for a pair of aircraft wings. But look at the hammering CBI have taken..
“Why did business take so long to work out Brexit?”
I think the psychologists would call it ‘denial’.