Britain formally leaves the European Union at 11pm tonight. This isn’t the real deal though – unless you define leaving as having a blue passport and a fistful of grammatically questionable Brexit coins.
Not a lot will change during the transition period. There won’t be any additional tariffs or checking of goods, freedom of movement still applies, and you’ll even still be able to queue in the areas reserved for EU arrivals when travelling.
The clock is ticking though. The UK is now allowed to start formal trade negotiations with the likes of the US, Australia, and, of course, the EU. Boris is supposed to get an agreement with the EU sorted sharpish so we can leave relatively smoothly by the end of the year. Many experts think it’s a tall order.
A majority of Britain’s business leaders are still clamouring for some clarity. As the latest survey from the Institute of Directors reveals, over 55% of its respondents believe they will “only be able to make planning and investment decisions with certainty when we understand our future relationship with the EU”, as opposed to 35% who think “this withdrawal agreement will give my organisation the certainty needed to make planning and investment decisions.”
It also looks like an EU trade deal trumps all others for Britain’s business leaders, with 61% thinking negotiations on the UK's post-Brexit trade and economic relationship with the EU is more important, versus 20% prioritising trade deals with non-EU countries, like the US, after Brexit.
MAC attack
The Migration Advisory Committee – which advises the government on visa reforms – has delivered its report on a points-based system and salary thresholds.
While the Conservative manifesto called for an Australian-style points-based system to control immigration, the MAC has mostly rejected this idea – instead, recommending an evolution of the current system.
While it suggests elements of a points-based system could be used for a minority of skilled workers coming to the UK without an arranged job, most people would need a job offer that meets a minimum salary threshold, as is currently the case for non-EU migrants.
The report recommends that the current £30,000 cap for non-EU workers be reduced to £25,600. However, this would be higher for some industries (calculated at the 25th percentile of average salaries). While it’s recommended that immigrants under 26 and recent graduates from UK universities should be granted permission to work in the UK with much lower salaries – a minimum of £17,920 per year.
In general, the report should be welcomed by entrepreneurs. However, this isn’t a solution for everyone. Business owners in the hospitality sector, for example, which currently employ a lot of EU workers won’t meet the threshold.
As well as pushing prices up and standards down for consumers, this could damage areas of the economy that are currently flourishing.
Taking an example of an industry I know well, the UK is currently the best place in the world for bars, with London, arguably better than New York. For cultural reasons, Italian and central and eastern European born migrants dominate the bar scene. Those at the top would easily pass the earnings threshold, but they all started as a ‘bar backs’ and worked their way up. Cutting off this pipeline of talent would diminish this industry.
What is true for bars is true for hundreds of skilled roles that fall below the threshold. Some of this could be mitigated by a temporary short-term workers' route or by younger workers at a lower threshold. However, the thousands of pounds it costs for the Tier 2 licence, visa fees, legal fees and immigration skills charge would price most employers and employees out of the market. Also, the system would need to set out a clear path for those coming who want to stay longer.
Freer markets are more efficient, even in people. Ultimately, no system will be better than free movement, which will end (assuming there is no extension) on 1 January 2021. The MAC’s report should be encouraging for most entrepreneurs, but the government may just ignore it, even though they will be hard-pressed to come up with a better workable alternative in the time available.
So what should entrepreneurs be doing now? EU, EEA or Swiss citizens need to apply for the EU Settlement Scheme to continue living in the UK after 30 June 2021. Any EU citizen who moves to the UK before the end of the transition period can apply – so it’s not too late for anyone who might want to move here with a view to staying. It’s free to apply and the deadline is 30 June 2021.
Deep dive
The Startup Europe Partnership (SEP) has got in touch to see if any of you would like to apply for a place at the final Scaleup Summit on 26/27 March 2020 at the London Stock Exchange.
It's a two-day event for international corporates, investors and scaleups operating in specific verticals. It will feature deep dives into Digital Construction, Industry 4.0, Oil & Gas, e-Energy Solutions, Fintech/Insurtech, Telcos, and Cybersecurity. Apply for a place here.
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