Brexit -- Where Are We Now? Could Scotland Now Rival London?

Well, there you have it. History has been made, but certainly not in my name -- nor, I suspect, the vast majority of the country's marketing and advertising practitioners. London and the commuter areas voted for Remain. But the country has spoken, and we will have a new Prime Minister by the autumn negotiating a switch to a trade deal with the EU which we can only hope will be more advantageous. Countries on the periphery of Europe such as Norway that have such trade deals with the EU have been pointing out, of course, that they still pay a high fee for access to the EU market and still have to accept EU migration.

Whatever David Cameron's successor does, he or she will need to have admirable negotiating skills. There is already talk of "contagion," of other EU members calling referendums to leave the union -- and so Brussels will be loath to give the UK a better deal out than in. If it does, it is giving a green light for the union to fall apart as other countries realise they can follow the UK and get a better deal.

Just in case you're outside the UK -- perhaps in the U.S., reading the news and scratching your head, let me explain. It's basically a Trump. A politician on the outside of mainstream politics, Nigel Forage started to campaign for the UK to leave the EU several years ago from a position of being a disgruntled Member of the European Parliament (MEP). He was speaking up for the little guy who loses his job to the immigrant, who gets crushed by big government, who doesn't recognise the stores in his high street because they're now East European delis and he can't get a doctor's appointment nor get his kid in the local school because of mass migration. He wasn't taken too seriously until, in order to stop his party, UKIP, from winning seats in the 2015 election, the Prime Minister vowed to have a referendum on Europe. It took the wind out of Forage's sails and Cameron won a majority, albeit at the price of a public vote on Europe.

The better deal he promised to negotiate with the EU didn't convince many people because, despite ditching a commitment to "ever closer union," the UK still had to keep its borders open to mass migration. The result? The "little guy," the blue collar worker, united with the more right-wing elements of the ruling party who are not mostly in Cameron's inner circle and gave the establishment a punch on the nose. We are now in the odd position of waking up in a country that is only part of the EU for the time being. It's an over-simplification, but it may explain how we get here.

For anyone making long-term investments about the EU right now -- Honda has a massive car plant near me, as does BMW-owned MINI -- it will be very tempting to prioritise central Europe. France, Germany, the Netherlands, and Belgium are probably looking like good bets right now. Or are they? The EU, in my opinion, will see a mass exodus and become a doughnut. A few founder members hanging on to France and Germany in the middle, united by the Euro, with a ring of countries that simply want a trade deal, not a political or monetary union. Spain, Portugal, Italy and Greece will look at huge unemployment rates and their massive debt levels and think they are better off just trading with Europe, not using its currency and its laws.

In the short term, we're already seeing the panic, and long term, there is hope -- but the next Prime Minister needs to get a trade deal done with the EU as a matter of urgency to convince inward investment that the UK is still a great base. It may not be in the EU, but at least there are no tariffs to worry about -- it's business as usual. Services are the only part of the economy where the UK has a huge surplus with the EU -- circa GBP10bn per quarter -- and so the powerhouses of advertising and marketing need this reassurance to remain competitive. 

If you're looking at outside bets, however, what about these associated implications? Scotland voted overwhelmingly to stay in Europe, just like London and its commuter towns. So it is almost a certainty that the country will demand another referendum and will overwhelmingly vote for independence at the second time of asking. It will then immediately apply to become an independent member of the EU, which will welcome it with open arms to make a point to the rest of the UK. 

So if you are keen on investing in marketing and advertising in the EU as well as the massive digital market of the UK, did Scotland just become a safer bet? I think it just might have done until the free EU trade future of the UK -- or what will remain of the UK -- is assured.

1 comment about "Brexit -- Where Are We Now? Could Scotland Now Rival London?".
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  1. Charles Nicholls from SeeWhy Inc, June 25, 2016 at 10:40 a.m.

    I think you mean Nigel Farage (not Forage). No doubt your spell checker though it knew better!

    There's no guarantee that an independent Scotland could meet the criteria for EU entry - previously the EU have said that they would have to apply for membership like any other country which takes years, assuming them can meet the stringent entry conditions. However who knows what would actually happen given the current turmoil in the EU.

    I also doubt that Scotland would supplant London for the creative industries, even if it were to vote for Independence (it rejected it last time), and then subsequently admitted to the EU. There is a lot of talent in London that is unlikely to relocate. What is more likely in my view is that company registrations might move to an EU country to bypass any trade differences.

    May we live in interesting times!!

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