Steven Landsburg in his book The Armchair Economist says – Most of economics can be summarized in four words: “People respond to incentives.” The rest is commentary.
What exactly are we, as individuals and businesses, supposed to do to prepare for BREXIT?
The Department for Exiting the European Union has 41 publications, none of which seem to be particularly useful.
The first paper produced by the department is on “aspirations” for future customs arrangements. It notes that 200,000 businesses trade with the EU and imports and exports to and from the EU are over half a trillion pounds.
Is that big or small?
There are around 2 million businesses in the UK, 97% of them very small. Around 10% will be affected directly by the changes to trading, which would appear to be significant.
90% of future economic growth is going to come from outside Europe, a third of that from China.
The UK, however, cannot agree trade deals with any other countries until after it leaves the EU in 2019.
This may not be a problem. Most of the world seems happy to trade under World Trade Organization (WTO) rules.
Ruth Lea of the Arbuthnot Banking Group argues that trade with non-EU countries such as the US, China, India, Australia, Canada, Russia, the Middle East and so on have grown significantly in the absence of trade agreements.
In her words, “commercial factors and growing markets are arguably of far greater significance than trade agreements.”
There is quite a lot happening that businesses looking to grow should be aware of.
For example, the UK India Business Council highlights sectors that are changing rapidly from Advanced Engineering and Manufacturing to Sports Sciences.
There are opportunities here, but they require engagement and effort to get going.
It may be up to individuals and businesses to chart their own course through the changes that BREXIT will bring.
A global mindset and willingness to develop the capability to collaborate and work with partners around the world may be the differentiating factors that sort the winners from the losers as the system changes around them.
We need sticks, carrots and tambourines to get this right.
The government’s job should be to create the right incentives (sticks and carrots) to encourage the actions that will result in sustained growth.
Equally importantly, it needs to get better at strong and sustained communication (tambourines) about the benefits of international trade for all businesses.