Brexit & Inward Investment
At the risk of being a) lost amongst the ubiquity of Brexit commentary, and b) overtly political, I thought it worthwhile to make an attempt to put a positive spin on Brexit and inward investment for the UK. Here are a few suggestions:
UK Market Access: The UK is still going to be a major global market. Should the UK no longer provide a gateway to Europe (which depends on the terms of exit), companies may still feel they need to have operations here. In fact, companies with a headquarters elsewhere in Europe may now need to have a second site just for the UK market!
State Aid (Incentives): EU law dictates that financial incentives at are available to less wealthy regions of the Union, with different maximum ceiling levels depending on the region’s GDP. This means that the most recent accession countries tend to have the greater access to incentives for attracting investors. Therefore in the UK, many parts of the country are not able to provide incentives, and certainly not to the same intensity as elsewhere. Some of these locations may well argue that an ability to now provide incentives at levels that can be defined solely by the UK, will increase their attractiveness.
Further Competitiveness Factors: Rather than the UK funding the EU to then redistribute those funds, it is arguable that with decision making at the local level, funds can be better channelled. Much has been made of the £350m for the NHS, but beyond this, spending that goes into areas of specialist training in specific locations, could make those locations more attractive than would be achieved through EU schemes.
Regulation: Some firms believe that the reduction in regulation that comes with Brexit provides a competitive advantage to the UK. Indian manufacturer Mahindra is one example of a firm that believes the change could be beneficial to them. Perhaps this advantage is most easily visualized for investors from outside Europe, who can objectively compare UK regulations against those of the EU.
Stability: Over time, it is arguable that a single country which is able to set its own path is a more stable investor proposition than a bloc where if one countries catches cold, everyone suffers (re. Greece).
So, are you convinced? Me neither. Probably the most important aspect of the UK investor offer to non-EU countries is offering market access to the entire bloc. If that is now longer available, it is hard to see how inward investment cannot be affected, despite the arguments above. If the single market is maintained however, then inward investment could be maintained – but this is essentially continuing the status quo but without UK voting rights (the EEA or Switzerland models) - a result that 17 million people probably did not think they were voting for.