In her speech to the CBI Annual Conference in November, the UK's Prime Minister Theresa May presented a new Industrial Strategy, where she revealed the government's plans to minimize the long-term negative impacts associated with Brexit.
Businesses always choose to operate in the environment that offers the best conditions for growth and development. If these conditions no longer exist, it doesn't take long for large firms to move their HQs from one country to another. Britain has long been one of the best locations for business operation, but since the EU referendum, it's now a big challenge to retain businesses in the country.
To minimize the negative post-Brexit consequences and to retain Britain's competitive advantage, May offered a significant cut in corporate tax to make it the lowest in G20 countries. The US president-elect Donald Trump promised to cut the tax to below 15%, meaning that more firms worldwide will be tempted to move their HQs from Britain. Acknowledging this, Mrs. May also offered to lower corporate tax to under 15%, with Bloomberg's columnist Chris Hughes suggesting that the tax will be cut as much as the country can afford, a necessity due to the potential devastating consequences if companies leave the country after they leave the EU. If corporate tax is as low as 15%, Britain has a chance to challenge Ireland's position as the low-tax destination for businesses, even if they are operating outside of the EU.
In order for post-Brexit Britain to attract more businesses, the country needs to ensure small and emerging companies benefit from the government’s policies as much as large firms. The Prime Minister said the new Industrial Strategy is not going to be about 'propping up failing industries or picking winners but creating the conditions where winners can emerge and grow.'
To ensure there is support for young companies and particularly those who innovate, the government aims to invest an extra £2 billion in R&D initiatives, and also, they are willing to launch a review of R&D tax incentives to support and attract more scientists, innovators, and technology investors. However, May stressed that initiatives will work only if businesses are willing to play fair: 'That is the ambition - and we need your help to put it into practice,' May told business leaders during the conference.
Playing fair, in that instance, means that companies must take into consideration the voice of their workers and get a better sense of the wider society. The UK's C-suite is already obliged to act on behalf of the whole company and not only the shareholders, but further policies are needed to ensure there is no gap, where corporate leaders may sacrifice workers' rights in favor of the 'privileged few'. Earlier, May suggested that workers must be put directly on the boards of the companies so their voices are heard. This time, however, she only said companies should introduce advisory panels for these needs. The statement has caused more confusion amongst all parties as there was little-to-no clarity on executive pay, to what degree companies are obliged to introduce 'advisory panels', and how much 'representation' companies must give to their workers.
Even though the Industrial Strategy doesn't entirely answer the question of what Brexit means for business, the first steps towards the creation of the country's new business model are being taken. The Prime Minister stressed that new initiatives and a healthy business environment can only happen if there is a strong cooperation between businesses and the government, where both sides can ensure there is only a short-term loss after the country leaves the EU.