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UK Government’s Brexit White Paper: from the perspective of Scottish businesses

UK Government’s Brexit White Paper: from the perspective of Scottish businesses

Brexit

Within an hour of MPs in the House of Commons receiving the UK Government’s Brexit White Paper setting out its negotiating position, the Secretary of State for Scotland engaged proactively with a roundtable discussion with Scottish business and industry body leaders, hosted by the Law Society of Scotland.

Given the Brexit interventions of President Trump, a “fasten seatbelts” sign was issued to warn Scottish business leaders that political turbulence was inevitable.

Whilst the fact of a UK trade plan – perhaps even any trade plan – would be welcomed by Scottish producers, manufacturing and agri goods sectors, difficulties with the detail are becoming more evident with the opportunity to understand fully the White Paper.

First, the Brexit White Paper was the UK Government’s cabinet approved negotiating position only. The final Brexit deal (assuming there is one), and how that will affect the Scottish economy and its supporting businesses, is impossible to tell at this stage. The negotiations with the EU, resuming this week, would continue to be tough and will probably go to the wire.

Second, we expect the services sector (and in particular financial services) to be concerned about the current negotiating position (and which could be very difficult to improve upon for financial services). It has since been described as a “real blow” for the UK’s banking sector. Although UK Government engagement with that sector has been promised, at least in Scotland, damage to this sector would be a matter of real and significant concern given the importance of the services sector to the UK economy as a whole.

The third issue relates to workforce resourcing. This concern has a distinctly Scottish flavour to it. There is a need for reliable workforce to do the work currently done by EU migrants. With a declining working population in Scotland, the “people issue” affects business in Scotland more acutely than other parts of the UK.

Currently, businesses in Scotland are competing with businesses elsewhere (such as, London) for Home Office certificates to sponsor workers needing visas. The difference in salaries across the various regions throughout the UK place Scottish businesses at a disadvantage. This is not only an issue of seasonal workers but also for longer term roles, including career long positions.

The Office of National Statistics (“ONS”) has published its latest migration statistics and has reported that “there are still more people coming to the [UK] from the EU than leaving it.”  The UK-wide analysis from ONS may be correct but the worker retention continues to be an issue for Scottish businesses. Whilst not caused by Brexit, Brexit is certainly not helping to solve it.

Burness Paull has engaged with our key business and commercial clients on Brexit awareness, many of whom are starting to see the impact of the uncertainty of a post-Brexit world but find Brexit planning almost impossible. As clarity is unlikely to be provided soon, the ever shifting Brexit landscape is testing the ability of businesses to respond to these challenges.

By Robert Phillips

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