Columnist Rob Lane fears a Brexit slowdown and considers the impact on the AV industry.
A year on from my previous column discussing Brexit and its immediate and as yet unseen impact on our industry (Installation, October 2016), where are we now? The fact is, we still have no definitive picture of what Brexit is going to look like, and how exiting the EU will ultimately shape UK plc. What is certain is that both the UK and eurozone economies are going to experience rough waters as the Brexit process moves towards the UK’s official leaving date of 29 March 2019 – although an as yet undetermined transitional period will hopefully provide ballast.
The current Brexit situation couldn’t be more unsettling to business. With leaks to the Guardian newspaper of polarising Brexit positioning documents from Whitehall and Brussels, and contradictory progress statements from each side, it’s difficult to see how common ground can be reached.
The Whitehall leak regarding EU immigration seems to confirm the government’s position – or at least that of the hard Brexit faction of cabinet – that there will be no single market or customs union access during the proposed transitional period, given that free movement is a cornerstone of membership of both of those trade bodies. But it’s difficult to imagine how any transitional period could possibly be viable without temporary access to at least one of them, and therefore hard to see how we could avoid a ‘cliff-edge’ EU exit without a minimum two-year transition. A cliff edge would, of course, be bad for business; many trade bodies and businesses reacted in horror to the leaked document’s proposed hardline immigration policies.
Labour’s recent crystallisation of its position on any potential transition will have eased the anxieties of those fearing a cliff edge, but it remains to be seen how much influence those in opposition to a hard Brexit – across all parties – will have on the final result. Calls for a referendum on the outcome of the negotiations will be welcomed by many, but make the ultimate endgame even less certain.
Despite AV’s continued growth, UK-only businesses are vulnerable - especially those without a strong service division
Impact on businesses
UK businesses are already seeing an impact, with uncertainty putting the brakes on investment. And although the UK’s tech integration industry continues to boom, there are growing signs of a slowdown in the specification of technology, as businesses look to consolidate existing equipment.
Projects are still being green-lit – even in the public sector – but while corporations, particularly the blue-chips, have deep pockets and continue to specify new technology, the mid-market is beginning to feel the squeeze. The overall UK picture, from industry contacts I’ve spoken to, is that AV continues to boom, but Brexit – or the uncertainty around it – is beginning to bite.
Of course, as companies scale back on swapping out old tech for new, the need for additional service contracts increases, and this side of the industry is seeing something of an upturn. Some are predicting large growth in the service sector as companies rationalise their workforce, predicting challenging times ahead, and instead outsource their tech service divisions. This is clearly an area UK integrators would be well advised to focus on.
And what of mainland Europe? Since last June’s referendum vote, the UK has had to be more agile than its continental counterparts in addressing the uncertainty created by the Brexit process – not least dealing with a weaker pound. European integrators, with a more buoyant euro, are more likely to play a waiting game, leaving any post-Brexit business decisions until the process is concluded.
Of course, those UK integrators with a wider reach than AV-Albion are in a much stronger position to weather the stormy effects of the Brexit process and any potential post-deal hurricanes. Globally positioned integrators can more easily offset any UK downturn than those without a wider infrastructure. Despite AV’s continued growth, UK-only businesses are vulnerable – especially those without a strong service division.
When I was researching last October’s column, Polycom’s Tim Stone asserted: “In business, every challenge is an opportunity”. Wise words, but to meet the Brexit challenge it’s important we face it head on, keep our nerve and don’t batten down the hatches too tightly to weather the storm. If we put up barriers to business, sticking when we should be twisting, investment will dry up and recession – or worse – will bite. And then Brexit will mean the very thing many of us have come to fear.