L2’s Europe MD, Simon Birkenhead, gives his take on Brexit.
Reading Brexit news on social media today, you might be expecting an Independence Day-style decimation of the human race. Apocalyptic forecasts of the end of civilisation as we know it have been emanating from usually quite sensible people. All because a majority of the UK population voted to leave the European Union.
A referendum is the most pure form of democracy. Many people are clearly unhappy with the result, but unfortunately that’s because you don’t always get the result you personally wanted in a democratic vote with one winner. The EU has brought many advantages to the UK and its member states, but those come lumbered with many disadvantages many argue have held back the UK economy and its citizens’ standard of living. Ultimately the collective opinion of the UK population has decided the disadvantages outweigh the benefits.
But fear not, we won’t be seeing zombies walking the high streets of UK towns. The UK is still in Europe. We will not be relocating the country to Asia (although personally I love this idea given the recent weather we have been experiencing in London). You will still be able to come here on holiday. The economy is not going to collapse. Commerce and collaboration between the UK, EU member states, and the rest of the world will continue. There will be an inevitable period of disruption, chaos, and knee-jerk panic in the markets, but the mid/long term prospects for the UK are positive. Besides, the UK will continue to be a member of the EU for at least two more years whilst separation agreements are negotiated, and nobody knows what the UK’s future relationship with the EU will look like.
So what are the short term implications for the European digital economy?
Digital products, such as online advertising or digital intelligence, are unlikely to be impacted directly by a UK withdrawal as the EU does not impose tariffs on intangible goods. However, a devaluation of sterling will make products and services purchased from UK companies cheaper if you’re paying in another currency. That’s good news for Eurozone citizens importing goods or services from UK or if you work for a UK-based organisation that sells internationally. However, UK companies or individuals who buy from Eurozone vendors will find prices are likely to go up.
The bigger risk to the digital economy is uncertainty. UK citizens may hold back on their consumer spending through a fear of potential future job losses (which are unlikely to materialise, in my opinion, except perhaps in London’s banking industry). This in turn may encourage businesses to cut their marketing budgets to reduce expenditure.
But, as we love to say at L2, a crisis is too good a business opportunity to waste. As international companies turn inwards to focus on reviewing their business strategies and budgets in light of Brexit, there’s an opportunity for faster moving competitors to aggressively use digital to increase their share of voice and capture market share.
The digital economy is global and is largely unrestricted by country or trading bloc borders. We would encourage digitally-led organisations to use the confusion around Brexit to outsmart their slower moving competitors and focus on delivering exceptional digital experiences for their customers.