U.K. Businesses, Officials Push For Clarity, Transitional Deal With European Union

Aug 3, 2017
Originally published on August 3, 2017 3:03 pm

Rich Walker directs a robotics company, Shadow Robot, out of a modest office in London.

He's tired of the British government fighting over how to exit the European Union. It's hurting his business.

"The fuse is burning," he says, referring to March 2019 deadline. "And we've not managed to get anything done or sorted out since last year."

Walker, who wanted Britain to remain in the EU, wants to know if some of his roboticists will be forced to leave because of tougher immigration rules. He wants to reassure his customers, many of them professors dependent on research grants, that the British economy and the currency, the pound, will stay stable.

He wiggles the fingers of a black-and-silver robotic hand that costs more than $150,000.

"These go all over the world, into research communities, people doing advanced technology around robotics," he says. "We need to know what's going on with tax and trade rules. We need to have an idea of where the economy is going so we can plan."

The government of British Prime Minister Theresa May is torn between those who want a clean break from the European Union and those who want to preserve as many ties as possible, such as remaining in the single market and the customs union, after Britain leaves the EU in 2019.

The infighting has gotten so bad that it's recorded in breathless detail daily in the British press. It's been at full pitch since disastrous elections in June left May's conservative government hanging on to power.

Pro-EU Cabinet members such as Philip Hammond, who leads the U.K. Treasury, want a slower exit. Hammond is pushing a transitional deal with the EU that would keep current trade rules in place until new rules can be negotiated.

"When the British people voted last June, they did not vote to become poorer or less secure," he told financiers in a recent speech. "They did vote to leave the EU and we will leave the EU. But it must be done in a way that works for Britain."

What works for Britain is now up for grabs, especially when it comes to immigration rules.

May's office said there are plans to end the free movement of EU citizens to and from the U.K. after March 2019. Others in her Cabinet want the doors to stay open.

Alan Soady of the U.K.'s Federation for Small Business wants clarity.

"If you run a small business, let's say a tech start-up company, you have five employees, two of those are EU citizens; you want to know whether they are going to be able to stay," Soady says. "If you are recruiting right now, and employing an EU national, you don't know whether that person will come under the new arrangement or whatever the old arrangement is. And businesses do need some certainty around that."

Citing business concerns, staunchly pro-EU politicians are seizing on the government's Brexit paralysis.

Former Prime Minister Tony Blair told Sky News he hopes Brexit is dead.

"I think it's absolutely necessary that it doesn't happen because everyday it brings us fresh evidence that it's doing us damage economically," he said. "Certainly, doing us damage politically."

There are indeed signs that Brexit is damaging the City of London, the historic financial center. For starters, big banks are looking to relocate their European headquarters.

"They are reaching the point where they can no longer wait to see what the government is deciding to do," says Barbara Casu, a professor at London's Cass Business School. "We are hearing news of banks choosing the new headquarters within the European Union. For example, the Bank of America Merrill Lynch has announced a move to Dublin, following on Morgan Stanley choosing Frankfurt."

Outside the Lamb Tavern, a pub in the financial district where insurance executives are having lunchtime pints, there's talk of moving their headquarters to Luxembourg.

But David Buik, a market commentator with city broker Panmure Gordon, says talk of London's demise as a global financial hub is misguided.

"I've been here in the city for 55 years," he says. "And I have seen the evolution and the development of the City of London on the international basis. And we have nothing whatsoever to be frightened of."

Unlike many in the financial district, Buik supports Brexit. His peers, he says, "want me taken away by two guys in a white coat. But I'll live with that."

There are many more Brexit supporters in the town of Romford on the outskirts of London. It's in the borough of Havering; near 70 percent of voters there cast ballots to leave the EU, one of the highest pro-leave percentages in the country.

Town Councillor Lawrence Webb of the nationalist UKIP party blames EU bureaucracy for Romford's economic woes.

"Just take a look around you. There is a boarded-up shop there; there is a boarded-up shop on the corner there," he says, walking down a lively main street. "We have in Romford town center an above-average number of businesses that are closed or not trading."

He's wants Britain to leave the EU as soon as possible and restore its prosperity through new trade deals with the U.S.

Rich Walker, the roboticist, says that with all the chaos in the government, a quick exit seems highly unlikely.

"But if [Brexit] didn't happen because we were too incompetent to make it happen," he says, "that would be something."

NPR producer Samuel Alwyine-Mosely contributed to this report.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

AILSA CHANG, HOST:

Britain's government is torn between those who want a clean break from the European Union and those who want to preserve as many ties as possible after Britain leaves the EU in 2019. The paralysis is worrying small-business owners and those in the city of London, the U.K.'s financial center, who say the indecision is damaging the economy and putting any future prosperity at risk. NPR's Joanna Kakissis reports from London.

(SOUNDBITE OF ROBOT WHIRRING)

JOANNA KAKISSIS, BYLINE: Is this a robot?

Rich Walker is the managing director of the London-based company Shadow Robot. He's showing me a black and silver robotic hand wiggling its fingers.

RICH WALKER: These go all over the world into the research community, people doing advanced technology around robotics.

KAKISSIS: Each hand costs about $150,000, made by a team of international roboticists, whom, Walker says, now feel unwanted after Brexit.

WALKER: And we've seen various of our staff want to move from the U.K. back to where they came from or to other countries.

KAKISSIS: On top of that, many of his customers, dependent on research grants, are hesitating about orders.

WALKER: We have customers who are putting together long-term funding applications. And for those customers, the uncertainty - the volatility in the pound, the uncertainty over what's happening economically - is a real problem.

KAKISSIS: That uncertainty has been at full pitch since disastrous elections in June paralyzed the conservative government, leading the infighting over how to exit the EU. U.K. Treasury Secretary Philip Hammond wants a slower exit. He's pushing a transitional deal with the EU that would keep current trade rules in place until new rules can be negotiated.

(SOUNDBITE OF ARCHIVED RECORDING)

PHILIP HAMMOND: When the British people voted last June, they did not vote to become poorer or less secure. They did vote to leave the EU, and we will leave the EU. But it must be done in a way that works for Britain.

KAKISSIS: But what works for Britain when it comes to immigration has been a major issue. Prime Minister Theresa May wants to end the free movement of EU citizens to and from the U.K. after March 2019. Others in her Cabinet want the doors to stay open. Alan Soady, of the Federation for Small Business (ph), wants clarity.

ALAN SOADY: If you run a small business - let's say a tech start-up company - you have five employees; two of those are EU citizens. You want to know whether they're definitely going to be able to stay. If you're recruiting right now and employing an EU national, you don't know whether that person will come under the old arrangement or whatever the new arrangement is. And businesses do you need some certainty around that.

KAKISSIS: The growing course of pro-business voices coupled with the divided British government's hesitant negotiations with the EU have put a spring in the step of remainers. While it may be nearly impossible to reverse course, Former Prime Minister Tony Blair told Sky News he hopes Brexit is dead.

(SOUNDBITE OF ARCHIVED RECORDING)

TONY BLAIR: I think it's absolutely necessary that it doesn't happen because I think every day is bringing us fresh evidence that it's doing us damage economically - certainly, doing us damage politically.

KAKISSIS: There are signs that Brexit has damaged the city, London's historic business district. Speaking on Skype, professor Barbara Casu of London's Cass Business School says banks want to relocate.

BARBARA CASU: They are reaching the point where they can no longer wait to see what the government is deciding to do and that we are hearing news of banks choosing their new headquarters within the European Union. For example, Bank of America Merrill Lynch has announced a move to Dublin, following on from Morgan Stanley choosing Frankfurt.

KAKISSIS: Outside The Lamb, a pub in the city where insurance executives are having lunchtime pints, there's talk of moving their headquarters to Luxembourg. But market analyst David Buik, who unlike many here supports Brexit, says London will still be a global financial center.

DAVID BUIK: I've been here in the city of London for 55 years. And I've seen the evolution and the development of the city of London on an international basis. And we've nothing whatever to be frightened of.

(SOUNDBITE OF ACCORDION PLAYING)

KAKISSIS: Far from the well-heeled voices of the city, the town of Romford sits on the outskirts of London. And it's full of Brexit supporters. Town Councillor Lawrence Webb of the nationalist UKIP party, blames EU bureaucracy for Romford's economic woes.

LAWRENCE WEBB: Just take a look around you. There's a boarded-up shop there. There's a boarded-up shop on the corner there.

KAKISSIS: Webb wants the government to move on exiting the EU as soon as possible, hoping that new trade deals with the U.S. can revive Romford and the rest of the country. Joanna Kakissis, NPR News, London.

(SOUNDBITE OF LOCAL NATIVES SONG "YOU AND I") Transcript provided by NPR, Copyright NPR.