The political situation in Great Britain at present might put some business owners off, but for the canny investor, a business venture in the UK might be set for significant long term success. Here are just a few reasons to be cheerful in a time of apparent turmoil, and plough on with any plans to invest in British enterprise.
Britain has always been a European market leader in e-commerce. 2015 saw an estimated online spend of £114bn, almost twice as much as leading economy Germany. With manufacturing on its last legs and the financial services industry in a minor state of jeopardy, it’s likely that the government will double down with its focus on the digital economy.
George Osborne’s promise to cut corporation tax would have been a significant boon were he around to implement it. As it stands, there have been positive comments from new Chancellor Phillip Hammond, but little information on where the money would be made up.
With much of the EU’s economic clout still in manufacturing, there is a feeling that online business and software have been largely overlooked. Where most of the major regions have their own local alternatives to popular platforms and apps, Europe tends to piggyback on imports from America: from browsers, search engines and social media to travel, accommodation and shopping.
The freedom to work and move in the Schengen area has also had an unforeseen effect on the jobs market. The ease of hiring from Europe has reduced the incentive to hire form the rest of the world, potentially freezing out better qualified non-EU workers. Some of the world’s largest and most prolific tech hubs are in the U.S. and Asia, yet European startups have been essentially unable to benefit from their talent and experience.
If the UK gets its way, it will continue to foster tariff-free trade with Europe while also benefitting from an increased pool of skilled labour. Continuing to court China may play a key role here: stepping up trade deals and incentivising the recruitment of Chinese skilled labour could strengthen Britain’s bargaining position, as well as sating the desire for a stronger cultural relationship with China. For e-commerce businesses, this could potentially lower tariffs and provide greater access to the strong Chinese manufacturing market.
As lawmakers seek to regain stability and drive further investment, these issues will be hot on the agenda. But the UK could also benefit from being free from certain EU regulations. Recent changes to the way VAT is applied to overseas transactions have forced small businesses to shoulder extra admin fees, and in some cases forced them to sell through intermediaries.
Should Britain retain and extend its MOSS scheme, whereby HM Revenue & Customs do the legwork of calculating VAT for each transaction’s country of origin, it would improve both the logistics and cost-effectiveness of e-commerce businesses.
The services used everyday in the UK for work and leisure are also pouring money into other countries’ coffers at present, and little seems to have been done – or at least seems to have worked – to drive online innovation in Europe. Countries with exceptionally low rates of corporation tax have provided companies like Amazon with a distinct competitive advantage, presenting a huge barrier to potential home-grown competitors.
With the likelihood of more visas for skilled workers, broader independent trade agreements and the removal of red tape, the UK’s choice to leave could ironically instate the islands as a true technological powerhouse, and drive its economy onto even greater heights.