As the 2016 Brexit referendum approached, one of the main arguments used by the ‘Leave’ campaign was that freedom from influence from Brussels would mean the UK could chart its own course on political issues. such as international trade and business regulation. .
On these fronts, Brexiteers argued that free trade agreements and deregulation would be good for business.
To counter this, those who voted to remain in the European Union pointed out that the UK was already part of the largest free trade bloc in the world, noting that any deregulation that gives the country an unfair advantage over the EU will lead to tariffs as described in the Brexit agreement.
Of course, there’s no easy way to gauge a country’s friendliness for business, let alone compare present-day Britain to a parallel universe in which Brexit never happened. However, an important factor in any assessment must be how international companies approach the UK
In the past month, two such international companies have declared their intention to exit EU markets while simultaneously doubling down on opportunities in the UK.
As widely reported at the end of August, US Q-commerce company Gopuff is ending its operations in Spain as part of its plans to reverse its European expansion plans. Citing people familiar with the matter, a Bloomberg report said the move will allow the company to focus its regional attention on the UK market.
In another strategic EU-to-UK pivot, British online car retailer Cazoo announced on Thursday (9 September) that it would withdraw from the EU altogether. The platform only launched in France and Germany last year, and launched in Spain and Italy as recently as May and June this year, respectively.
See also: Cazoo withdraws from the EU to focus on the UK market
Explaining the decision, Cazoo highlighted its ambition to become profitable by the end of the year, suggesting its EU operations were draining cash while the more mature UK business proved sustainable.
For Gopuff and Cazoo, the business rationale for their decisions seems to be based on the numbers. As Bloomberg reported, the UK is one of Gopuff’s fastest growing markets, with revenue increasing 30% every month. Cazoo, meanwhile, said that in the year to July, it had doubled its retail sales in the country.
But why have these companies been able to generate enough growth and revenue in the UK while failing to repeat success in other markets?
For Cazoo, a company founded in the UK in 2019, the answer could simply be that pressure from shareholders to commit to profitability by the end of the year has not taken into account the youth of its non-UK operations and the time required. to get them out of the current growth stage.
For Gopuff, the reasons for choosing the UK over Spain are more complicated. As PYMNTS reported, London is one of the big prizes for Q-commerce globally, and compared to Spain, UK employment law is more accommodating to the gig economy model. favored by the likes of Gopuff.
Learn more: Battle for London rages on as Q-Commerce aims for profit path
Finally, while city councils in France and the Netherlands have taken a combative stance against the proliferation of dark shops, so far there does not appear to be any such backlash in the UK.
A business-friendly environment?
Ultimately, regardless of the regulatory environment, the UK is an attractive market for business due to the size of its economy and the purchasing power of its consumers. Yet government policy and economic health are linked.
On the regulatory side, the timetable proposed by new Prime Minister Liz Truss to remove EU legislation that remains in British law is expected to face strong opposition, even within her own party.
Related: Britain’s new PM inherits deepening crisis and skyrocketing energy bills
Truss’ plan for a 2023 deadline is even more ambitious than the 2026 deadline that former Brexit Opportunities Minister Jacob Rees-Mogg advocated in the previous government – and even that plan has been condemned as unachievable by several Rees-Mogg ministerial colleagues.
Much of the concern about rushing the process of changing legislation stems from fears that deregulation will end up watering down workers’ rights. Last week, The Times reported that Truss was considering overturning European-era labor law, which the paper called a “workers’ rights bonfire”.
From a trade perspective, there are also fears that if the UK goes too far on things like minimum wages and working hours, it risks the EU imposing retaliatory tariffs.
Read more: Potential BoE reshuffle in the cards as new UK Chancellor seeks to control inflation
So if the new government wants to continue to attract international companies and support local innovation, it must recognize that everyday consumers are the engine of the economy and that deregulation cannot come at the expense of ability of the British to earn a living. Right now, that ability is even more critical as the country faces its worst inflation in forty years.
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