With the clock ticking on the Brexit negotiations, there’s still very little certainty offered to Polish entrepreneurs in the UK as to their future.
Nearly eight months on since Article 50 was triggered, and we still have today – as we had back in March – three scenarios. One is hard Brexit, with WTO tariffs on UK imports from and exports to the EU. The second is a soft Brexit with a finite transition period during which a future trading relationship with the EU is negotiated. And then there is no Brexit, whereby the UK realises that a hard Brexit would be economically damaging whilst a soft Brexit – paying for single market access without having any say in shaping its rules – makes little sense.
The UK economy’s is not doing well. Although unemployment is historically low, wage levels in real terms are falling as inflation rises to 3.0%, raising fears that interest rates – which have never been lower – will rise, hitting millions of mortgage-paying families. In the second quarter, the UK economy grew by 1.7% year-on-year, while the eurozone overtook it (2.2%) and Poland got back into high gear (4.4% – all Eurozone stats). The High Street is feeling the pinch with retail sales growth down to 1.5% year-on-year (compared to 5.5% in mid-2016).
Poland is beginning to notice business moving in from the UK (at present mainly foreign capital), but as a ‘no-deal’ scenario looms ever larger, more companies using the UK as a base for EU operations will be inclined to relocate – and Poland is a very attractive location in terms of people and costs.
Yet there are grounds for optimism in terms of the UK’s place in the global economy post-Brexit. While sectors such as food, automotive, building materials, furniture – where Poland has traditionally been a strong exporter to the UK – will no doubt suffer, IT is looking good. Many Polish tech start-ups still see the UK as a natural springboard to global markets. The UK has the right eco-system to help tech start-ups scale up quickly (in particular access to capital), and the ‘made in the UK’ label on software remains a powerful marketing tool. We see more and more Polish tech businesses adopting the model ‘front office UK/back office Poland’. Given that you cannot put tariffs on zeros and ones, digital businesses from Poland that have global ambitions are not worried about Brexit.
Also Polish entrepreneurs who view the UK market of nearly 66 million wealthy consumers as an attractive market in its own right are not put off by what might happen. The UK might want to limit the inflow of unskilled EU migrants, but historically it has never restricted entrepreneurs wanting to come over to set up businesses here. If the profitability of your UK business depends on access to cheap Polish labour, or on access to large numbers of Polish consumers (or indeed both), then Brexit may be a heavy blow. But if you are agile with a realistic cost base, if you have your sights set on a more diverse market than just fellow Poles living in Britain, and you’re on the look-out for new opportunities – you may yet survive and thrive!