Richard Branson on a five-point plan to rebuild British economy momentum after Brexit
PUBLISHED: 09:04 29 July 2016 | UPDATED: 09:43 29 July 2016
In his first major article since Britain voted to leave the EU, Virgin founder Sir Richard Branson has drafted a five-point plan of Government action to stimulate the economy and rebuild momentum in British business.
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There is little doubt the vote for the UK to leave the European Union has impacted business confidence in the country. Uncertainty about the vote meant many companies delayed investment in new projects or plans to open offices in Britain for much of this past year.
The days after the vote saw the stock market fall sharply and the pound plummet to levels not seen since the 1980s.
The stock market has recovered, driven by the large international businesses which benefit from a strong dollar, as have some of the larger FTSE 100 companies that have dollar earnings. However, many businesses are still suffering, particularly smaller companies. And the fortunes of UK-focused businesses have not improved and the pound remains low, forcing up the cost of imports and travel.
The feeling of uncertainty hanging over Britain’s economy has continued into the summer, as the business community waits for clearer signals from the new Government as to how they plan to rebuild long-term relations with our EU trading partners and forge new ones around the world.
Over the last few months I made no secret of my belief that voting to leave the EU was the wrong decision for Britain. I feel strongly the EU has created an age of peace and stability in Europe; one where the continent’s nations are focused on working and trading together, where Europeans are living in each other’s countries and travelling freely around. It has created a culture where the EU builds relations between members and has stopped them going to war – as they had done for centuries before.
From a business point of view, it has been more fundamental. The UK is part of large trading block of 500 million people and has access to investment and talent from across Europe. The country attracts businesses from all over the world to set up and invest and this has provided a much needed stimulus to the economy. The vote to Leave has put all that at risk. Worse still, there seems to be no clear plan as to how we will negotiate trading relations after the Brexit vote.
Over nearly five decades in business, I have been known to take risks – backing an unknown young Mike Oldfield with his
first album; launching an airline with
just one plane on the busiest route in the world and ordering sets of tilting trains before we had the track to run them on. But in each case, I had assessed the risk and tried to cover the downside, before we leapt in.
On Brexit, I feared the politicians supporting it had not thought through all the downsides and the vote to Leave would, at best, make it much more difficult to trade with Europe. At worst, the UK would threaten to cut itself off from its closest and biggest trading allies; restricting UK companies from a market of more than 500 million potential customers.
A month on from the referendum, businesses across the UK must now adapt to this new reality and look for opportunities out of the disruption caused by the vote. Over the years at Virgin, we have found periods of uncertainty and recession to be good ones to expand through. Our larger and older competitors were often preoccupied by the downturns in their businesses or suffering from a lack of confidence, which allowed us to expand and take market share. Smaller and more nimble businesses can often capitalise on opportunities more effectively than their larger rivals who are caught up by bureaucracy.
Looking back, we ordered new planes for Virgin Atlantic in the early 1990s after the first Gulf War. We grew Virgin Blue in the early 2000s, after the collapse of one of our rivals Ansett in Australia. We built Virgin America through the teeth of one of the worst recessions in aviation history. We were able to expand Virgin Money out of the last financial crisis by buying Northern Rock and have not looked back, growing that business with further acquisitions and taking the company public two years ago.
Indeed, the paper you are reading this article in, The New European, is just another example of an entrepreneur seeing a gap in the market and creating a new business while larger rivals sat on their hands. Launching a newspaper in just nine days is no mean feat, but the team behind The New European were able to capitalise on a growing appetite for a new type of paper catering to the 48% who voted to Remain. It is early days, but in a very traditional industry with expensive barriers to entry they have started well.
So what advice would I give to Government and business builders looking at the opportunities in the UK right now?
Initially, I would ask Government to focus on five key areas to rebuild momentum in the economy and provide a stronger platform for the entrepreneurs and smaller businesses that are the lifeblood of any thriving country.
First, it is crucial to frame what our possible trading relations with the EU could look like. It is vitally important that UK business has some idea of how it will be able to trade with its closest trading partners and not slip back to the time before the 1970s when the UK was restricted by high tariffs and taxes. I started Virgin when we had to pay heavy import and export duties and it made it harder to expand.
Second, the UK needs to ensure EU nationals working and living in the UK, and UK citizens living in Europe, are able to carry on. There are roughly three million in the UK and many have helped create and build businesses. Losing such a talent pool would have a major impact on business prospects. Part of the UK’s great success over the last few decades has been the ability to attract talent from all over the world; it must not close its borders to this.
Third, the Government must continue to focus on major infrastructure projects that the UK desperately needs and were long part of former Prime Minister David Cameron’s manifesto. The country’s railway infrastructure is in need of upgrade and investment to cope with the growing passenger numbers and to connect the major cities in a reliable and fast way.
At Virgin we have long argued that the investment in High Speed Rail needs to be planned in conjunction with upgrades to the major classic lines. This should be on the list for the new Chancellor of the Exchequer Phillip Hammond (a former Transport Secretary).
Fourth, the UK needs to create more connectivity with the rest of the world to ensure we have the best opportunities for building new trading relationships. Our current airports in London are at full capacity and in desperate need of a new runway at Heathrow or Gatwick to compete with the nearest rivals in Europe and the growing connectivity of the Middle East airports.
This would create thousands of jobs and give a massive boost to Britain’s economy. Yet, the decision to build a new runway at Heathrow has been delayed by successive Governments and I have strongly argued that any further delays will hold back the economy for decades to come.
Lastly, I would look to continue and build on the success of Cameron’s Start Up Loan scheme – which encouraged entrepreneurs to start new businesses with small Government-backed loans of up to £25,000. Last year the scheme helped more than 13,000 companies get off the ground and at Virgin we provided funding, mentorship and support to more than 1,000 businesses in the last two and a half years.
This scheme has helped a new wave of entrepreneurs kick start their companies and created a vibrant UK economy. Three years on, I would go further and argue that the Chancellor should look to fill the funding gap that many growing start ups need with follow up financing – helping the successful ones fund that first big order, open a new shop, or hire the next few employees.
At times of economic uncertainty, this Government support would help to maintain the momentum.
The UK economy is at a crossroads but with the right targeted support from Government, it can recreate the conditions that allow businesses and entrepreneurs alike to take risks and grow their companies and recreate the momentum of the last five years.
Across the UK we need entrepreneurial spirit – just as this newspaper is showing!
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