Michael Sippitt, Chairman of UK law firm Clarkslegal LLP, addressed the TAG Alliances conference in Paris this week on a panel of lawyers and accountants from the US and Europe discussing the issues of Brexit, the business impact of President Trump, and the future of globalisation.
Michael emphasized the importance of global trade and investment to sustainable development, to engaging with developing countries, and to enable broad international understanding and collaboration. Michael explained how Clarkslegal is working with Commonwealth countries to build world trade and investment opportunities with special focus on sustainability.
It was a feature of the panel discussion that there is a need to work harder for global trade, and a poll of the audience showed a strong awareness of the challenge to professional firms to improve and adapt what they do to meet these challenges.
Michael spoke of the special opportunities for the Commonwealth in which the UK can now participate much more, with scope for beneficial trade agreements with the world beyond Europe. Michael also chairs the Commonwealth Environmental Investment Platform which works to connect investors, businesses and entrepreneurs in all aspects of sustainability and building resilience to impacts of climate change.
There was a common perception among the conference delegates especially from the US and Europe that business is troubled by uncertainty, that it is hard to predict long term growth, and events like Brexit have substantial international implications.
At the same time, Asian advisers appear positive about growth and trade, reflecting the major opportunities for increased business flow. There is a clear impression of the shift of economic power to the East, reflected in the revival of the traditional Asian silk roads and strengthened trade and transportation links.
The business reality in the UK is that merger and acquisition activity goes on regardless as every situation yields opportunities to some, and even uncertainty can become normalised. There has been so far only a small drop in merger and acquisition activity in the UK since the Brexit vote. Inbound activity is said to be holding up well, so overseas acquirers are still investing in the UK, especially in larger deals.
That reflects Clarkslegal's experience of international investors being attracted by the reduced value of sterling to make acquisitions in the UK. EU companies seem to be holding back from making acquisitions in the UK, which is being compensated by businesses from the Commonwealth and China. The majority of conference delegates in Paris could foresee a reduction ahead in UK/EU trade relations, so there really is the beginning of a mindset shift towards trade with other markets as the future medium term growth opportunity.
Michael sees a possible split opening up between the UK businesses who simply carry on as they are hoping for the best out of the Brexit negotiations and those who actively pursue new markets overseas. The probability of lengthy talks with Brussels about Brexit may work badly for businesses who take the wait and see option. The real challenge for the UK is how to gear up in using its undoubted global footprint to increase trade, and this is the vital mindset shift now needed, especially for UK small to medium enterprises. As the EU has around 7% of world population the new thinking is to do more business with the other 93%, especially as the Commonwealth population of 2.4 billion includes a demographic advantage of 60% being under 30 years old.
Michael is positive on the possibilities for UK business as long as it is quick to take advantage of global opportunities and to gain the know how and international contacts to achieve this. The imperative is for a reinforced ecosystem supporting SME business activity overseas, and that cannot wait for the final outcome of Brexit.
This is particularly where international professional advisers, banks, and existing business networks all have their part to play as well as Government services to business. Happily, the multiple Commonwealth networks are also still strong and very capable of becoming gateways to valuable new relationships in new markets.