Martin Togneri: Inward investment set for shake-up

Exporters face uncertain times after Brexit, says Martin Togneri. Picture: Greg Wood/AFP/Getty Images
Exporters face uncertain times after Brexit, says Martin Togneri. Picture: Greg Wood/AFP/Getty Images
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‘Brexit means Brexit” no doubt plays well as a political slogan in Brexit-land. But without clarity on its meaning, EU politicians planning their negotiating positions are likely to assume a maximalist interpretation.

What Brexit literally means, of course, is that we will leave the EU. The “Mighty Blighty” set’s fantasy that the UK is so important a market for the EU that they’ll cut us a deal that gives us tariff-free access while minimising our payments into the bloc and restricting freedom of movement is a non-starter. Mrs Merkel, they say, will crumble when German car-makers plead that the EU cannot slap a tariff on British-manufactured cars post-Brexit if the price is them facing an equivalent tariff to sell German cars in the UK. Such naïvety ignores the fact that the US and China are also hugely important to German car makers, yet US and Chinese-made cars face a 10 per cent tariff to enter the EU.

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So what does this mean for Scottish exporters? Once the short-term boost caused by sterling’s post-referendum falls has passed, they face a much more uncertain world.

The best one can say at this early stage is that, given that tariff barriers are likely because the referendum result makes the political price for avoiding them too high, for those companies whose products are among those in which the EU tariff is non-existent or low, the disruption is likely to be less; but for those with a focus on exports in which the EU tariff is high, exporting into the EU is likely in future to be no more attractive than exporting beyond the EU.

From the inward investment perspective much will change. If inward investors cannot get tariff-free access to the EU post-exit from Scotland, they will look elsewhere.

Post-Brexit, we will have to focus much more narrowly on potential inward investors operating in markets in which EU tariffs are low or zero, or which are planning new European operations to enhance global rather than specifically European supply chains, or that need access to a resource pool that Scotland has in an abundance hard to match elsewhere. But this means fishing in a smaller pool.

• Martin Togneri was chief executive of Scottish Development International from 2000 to 2007.

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