A hard Brexit will bring too many bad things, but the biggest one we will feel is the effect it will have on small businesses and entrepreneurs. Even if you’re not in business, you’ll feel it indirectly believe me.
It’s simple math: If you have a market of 512 million (the size of EU) or a market of 65 million (the size of UK), which market do you think your businesses will do better in?
The larger one of course. There is far more low hanging fruit in a bigger market. Once you put trade barriers up, the EU customers become far harder to reach from the UK.
I speak from experience. I am an entrepreneur who started from nothing and it was thanks to my then-forward thinking approach to working with Europe, that was the making of me.
In 1980 I started selling travel tickets from a kiosk in Earls court tube station. I worked hard and slowly my business grew. In 1999 I started to operate in Europe. We had only recently signed the Maastricht Treaty (1993), which was the making of the EU single market. So working with the EU was still very new and businesses were not very fluid within Europe. Most service companies were still operating within just one country. That is what they were used to.
I decided to try and sell to people in other countries. Because trading wasn’t quite as smooth as now it meant I had to buy small agencies in Europe with licenses to operate , so I could run my business through them.
I started by buying two small businesses in France and Germany. Then over six months I bought 7 others in Norway, Finland, Sweden, Denmark, Holland, Ireland and Spain. In hardly any time at all I was operating in 11 countries.
Collectively I had a market of 300 million people. Germany alone had a market of 80 million. My competitors meanwhile were only operating in the UK. Why? Because they weren’t bold enough to venture into this strange beast we knew as the EU.
And that’s how I grew my business. In 5 years I was employing 2,000 people, and had sales of $1 Billion. In 2004 I sold it for $471m. If I had done this more recently (well, before we voted to leave the EU) I would have grown this business much more easily. I wouldn’t have needed the overhead of many offices abroad because being part of the EU, I would already have had a license to trade in all 28 EU countries I would have been able to grow faster. Of course my competitors would have also benefitted because they could have followed what I did more easily.
You might think this should make me pro-Brexit but not at all. I have made my money. I would like other people and businesses to benefit too. If we go back to an era where small businesses can’t access the European market easily, it means we go back to an era where only either the very brave or the very powerful find a way to make good profits. We end up with a handful of superpowers and small bespoke British businesses stay in start-up mode, never fully able to scale.
It’s even worse for the manufacturing sector than the service sector because they have supply chains to pay tariffs on: Say you make children’s teddy bears. Say the button noses for the bears come from Europe. If we hard-Brexit and we get lumbered with WTO trading rules, those plastic noses will be subject to duties. Then when the completed teddy bear goes back out to Europe to be sold, duty is applied again on the finished bear. The supply chains of almost every business will be affected. How can we ever be competitive? What’s more is that the larger you become, the more you are dependent on supply chains chris-crossing Europe.
Businesses in the UK, will either shrink in size or they will set up plants in Europe – both of which means waving goodbye to jobs in the UK.
People say that Brexit won’t affect service firms, but that’s not true. Divorcing from the EU will bring obstacles. Say for example you own a small web design firm. Say you get a client in Paris. Sure you can still design a website and invoice them whether Britain is part of EU or not. But this invoice would carry an extra tax that has to be charged, as the EU has to put up taxes to all services from the UK because they want to protect their own service businesses. The only way to grow your business in France would be to open office there. Extra costs!
This is why the US is a such a powerful market. They have a market of 325 million people. Can you imagine if US lawmakers said: ‘Illinois can only sell to the Illinois market, if they want to sell to the New York market they’ll have to pay WTO tariffs.” That would be ridiculous. But this is no different to what we are doing if we Brexit without a deal or without staying in the Customs Union . We are slicing our markets to one sixth of the size that it is now.
Brexiteers get ruffled when they hear talk of a People’s Vote. But the reason we need one is because Brexit was never explained to the public without lies, when we had a referendum. The Leave campaign spread a romantic myth that we’d be better off and free to spike trade deals. When in fact they overspent on their campaigning budget by 10%, just to get a majority of 2%. Their campaigning was not only illegal, but to add fuel to the fire, they burnt all their files and papers…..very suspicious. To me that vote thus becomes null and void.
I do not want a second referendum. The PM has got a deal. The best Brexit deal that the UK could negotiate. But this is not what the voters voted for. This is why no decision can take place in Westminister. We need a confirmatory vote, from the people.
Here’s an example: You agree to buy a house. You do a survey on the property. The survey reveals a hole under the house. (a bit like the £39 billion bill we had to pay). You say, I decided to buy, thus I must go ahead! That would also be ridiculous no?
I am more than happy, if Brexiteers want to jump off a cliff. It is a free world. But, do not subject the country to jumping off the cliff with you.
By Dinesh Dhamija
Dinesh is an entrepreneur, philanthropist and Liberal Democrat political campaigner. He was the founder of eBookers and now manages investments in sustainable projects like education, ecotourism and property in Romania and India.
He is deputy treasurer of the Liberal Democrats and vice-chair of the Federal Board, which oversees the party’s policy-making process.
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