Innovation is key to companies’ viability both when they areahead of their peers and definitely when slugging it out toe to toe in increasingly competitive markets. Recently, Prime Minister Theresa May announced that for every £1 of Government spending on R&D support, British companies invest £1.7.In comparison, the Americans spend £2.7 and the Germans £2.4. The difference is not small and there is a chance that this could leave Britain trailing in the race for innovation.
In addition, Britain has its own uncertainties to deal with. Brexit has left companies unsure of what their next move should be. Currently companies enjoy free access to the largest global market but this access may not be valid for long.
While market uncertainty is a cause for concern, neglecting R&D, innovation and efficiency is a surerecipe for disaster. Brexit focused the British and all Europeans on the impact disruption to connected trade and movement may have. The economic outcome for both sides is still uncertain and is likely to remain so for a decade at least. While parts of Europe are enjoying steady growth, Britain’s own rebound seems to have slowed. The impact of Brexit on inter European trade in the face of recent American protectionism and increasing demand and supply from Asia will take time to work itself out. What is certain is that not preparing and innovating around a number of scenarios is not a strategy likely to lead to success.
While market uncertainty is a cause for concern, neglecting R&D, innovation and efficiency is a surerecipe for disaster.
So is your business prepared for Brexit?
The rhetoric is currently strong on both sides. The UK is saying that it will walk out of its relationship with EU and will take the customs confederacy with it. While Theresa May has reassured all Pro-Brexiteers that the UK was clear on their intention to back out of the customs confederacy – whether this survives the cauldron of Brussels and the issues surrounding Ireland will be interesting to see. Brexit will be effective on March 29th, 2019 and the transition may last roughly two additional years. At the moment, during this transition the UK will enjoy its current status though a number of restrictions are being mooted by Brussels.
At the recent EU Summit in February, the President of the European Council – Donald Tusk – highlighted the importance of dealing with the Brexit generated revenue gap. It is going to be more challenging to fund a number of important pan-European initiatives without the UK’s contribution. Policies on cohesion, Common Agriculture, investments in research and innovation, and pan-European infrastructure investments will all be materially affected.
Companies have the opportunity to avail of the new measures that the UK Government are introducing to encourage spending on R&D.
Brexit aside, the fact remains that companies have the opportunity to avail of the new measures that the UK Government are introducing to encourage spending on R&D. These include support for investments in cutting edge technology, innovative ideas and support for the right talent. The UK may no longer enjoy the full support of her European neighbours, but that too will create competitive and creative energies. We do not expect that the government’s support for innovation and its focus on employment through growth will waiver. If anything, relative taxation and investment competition with the EU is likely to spur additional governmental upsides for UK businesses.
If the fear of the unknown prevents you investing in the future, the reality is that the cost of inaction could be far worse!