Duncan Hopwood

POST BREXIT: WHY LOCAL AUTHORITIES NEED TO STEP UP ON INWARD INVESTMENT

July 7, 2016

From multicultural Leicester to cosmopolitan London this morning where the latest Capital 500 survey of business confidence was unveiled. The mood is angry.

In the wake of England’s humiliating exit from the Euro 2016 football championships, the economic goalposts have been moved, and no-one knows where.

What we do know, as Vicky Pryce from the Centre for Economics and Business Research put it, is that uncertainty is bad news for foreign direct investment. In a post-Brexit Britain, local authorities, LEPs and other organisations with a role to play in attracting investors to the UK are going to have to work harder. And for those that do, there could be rewards.

The survey, taken before the referendum, showed business confidence in the capital at its lowest ebb since the survey began in 2014.

Colin Stanbridge, chief executive of the London Chamber which published the report, said: “Government must move quickly to maintain confidence and minimise economic uncertainty.”

But that seems unlikely to happen in the current political vacuum. All the more reason for local authorities and everyone with a stake in regeneration to step up to the penalty spot in our hour of need. One reason to make plans to market local areas now is that the funding scenario is likely to change when the Government gets its act together and puts cash behind a concerted effort to avert an exodus of investors and international businesses. Organisations with effective marketing communications and PR plans built on strong inward investment strategies – such as our client Melton Borough Council’s Food Enterprise Zone – ought to be be well placed to gain funding from any new Government initiatives as well as winning a share of the likely boosted coffers in existing ones.

As firms ponder their future, business support organisations have an opportunity to show leadership and remind their catchment areas of the portfolios of help available. There is a communications job to be done right now to explain how they can help businesses to adapt to change, and there is an urgent requirement to develop arguments for overseas investment in local areas – building a compelling case for local areas that can survive doubts about the future of Britain outside the EU. It is important for organisations to act now to provide certainty and confidence. Delaying campaigns and putting decisions on hold will make things worse. Waiting for the Government and the EU to come to a settlement will only create a vacuum of uncertainty.

What can local areas learn from the reaction of London’s economic powerhouse? Colin Stanbridge again: “As Ministers now contemplate the UK’s future outside the EU, London’s new mayor, Sadiq Khan, needs to be involved in that planning – to help harness the resources necessary to sustain long-term economic growth.

“Government must look to maintain the capital’s position as world-leading place to do business. That means having the pull factors that will attract global companies to invest and locate in London whether that is around business environment, strategic infrastructure or skilled staff. We need to turn the result of the referendum into a time of opportunity for Britain.”

Vicky Pryce added: “The results of the survey certainly chime with what we have seen for the economy as a whole. The vote to leave in the referendum unsettled markets. Although a lower sterling may be good for exports it also raises manufacturers’ costs and the prices of consumer goods. There is no clarity on what trade deal may be agreed and whether tariffs may be imposed on UK exports. Or whether Scotland remains part of the UK in the longer term. Uncertainty is bad news for growth and for FDI, and the political vacuum created by the Prime Minister’s resignation adds to this. More monetary and fiscal support to the economy will be essential.”