Despite last week’s referendum result it’s important to remember nothing has actually changed for now. The UK is still a member of the EU, it is still the world’s fifth largest economy and is still home to a huge range of fantastic companies.
Our relationship with Europe will evolve over time but I have no doubt that UK business can and will adapt. We have faced challenging and uncertain times before and come out the other side. I believe the real danger at the moment is the risk of political drift. The business world hates the uncertainty that always comes with political upheaval. Chancellor George Osborne and the Governor of the Bank of England Mark Carney’s comments are welcome in this respect.
No-one can predict the outcome of the EU negotiations, but business has an important role to play. We should be a voice of reason in the coming months. No-one will benefit from bitter and fractious negotiations between Britain and the EU; everyone will lose. Whatever our new relationship with the EU, Britain is geographically and economically part of Europe and our economies are intertwined as they have been for centuries. We are proudly Scottish but have offices and clients throughout Europe and we don’t want that to change. Our pan-European presence generates jobs, wealth and tax revenues in Britain as well as in the countries where we’re located.
While politicians and policymakers will lead the negotiations, business has a voice that deserves to be heard – a voice that should call for a reasonable accommodation between Britain and the EU and a resetting of our relationship, rather than a scorched earth policy.
There will be much speculation over the next few months, not least about who will be the new Prime Minister to lead the negotiations. But I always believe in business it is best to focus on what I can control rather than external matters out of my hands. This means providing the best possible goods and services for my customers, managing costs and building a sustainable business.
I have lived and worked through Black Monday, Black Wednesday, the financial crisis and now through this
For instance, I have no control over the direction of stock markets. However, what I can do is ensure we undertake thorough research to identify fundamentally attractive companies to invest in on behalf of our clients. Particularly during periods of market volatility, I have found it is important to remain calm while others are panicking and to be alert to opportunities. During my career I have lived and worked through Black Monday, Black Wednesday, the financial crisis and now through this. I have learned that great investment opportunities emerge for anyone brave and smart enough to take them. The sharp sell-off in stock markets could be another occasion. As Warren Buffett says, the essence of good investing is to be greedy when others are fearful and fearful when others are greedy. Wise words which I instil into my fund management teams.
From a wider business perspective, the EU negotiations should not become a distraction from addressing other issues. UK productivity has stagnated since the financial crisis. Some parts of the economy have been slow to capitalise on technological advancements. My own sector – asset management – is a case in point but thankfully things are gradually changing.
It has become a cliché to say it, but the UK’s creaking infrastructure is restricting growth. This isn’t just about railways spanning the country or expanding airports (even though they are vital). It’s about making sure that the nuts and bolts that support the country are the best they can be. Our broadband network for example is extremely poor by global standards and relies largely on ageing copper wiring – less than 0.5% of households are connected to high speed fibre. The internet is the defining revolution of our generation. Stopping businesses and individuals from usefully accessing it holds us back.
I have spoken before of the need to take bold decisions in uncertain times
I have spoken before of the need to take bold decisions in uncertain times that will cost us money today and for which we are unlikely to see the benefits for years to come. Separate from the EU negotiations, policymakers and business need to work together to upgrade the UK’s transport and tech infrastructure. Asset managers have a key role to play here by providing the long-term investment funding for projects that at the same time earn a reasonable return for our clients.
The negotiations with the EU should also not prevent business from building ties with other parts of the world. For example, the International Monetary Fund (IMF) recently forecast that growth in Asia – despite the slowdown in China – will account for around two-thirds of global growth this year and next. Whether it is setting up operations in Asia or exporting goods and services to Latin America, emerging markets are only going to increase their share of the global economy in the years to come. Brave British businesses can take advantage of that if they want to.
Now is the time to look forward, not back.
By Martin Gilbert, CEO Aberdeen Asset Managers Limited
This article first appeared in the daily Telegraph on Tuesday, 28 June 2016 & on the Aberdeen Assest Management ‘Thinking Aloud’ blog.