Evan O’Connell – Head of French Public Affairs and Media at Aspect Consulting, Paris.
Eliot Edwards – Director for Public Relations & Government Relations at Aspect Consulting, Brussels.
One week on from Britain’s momentous decision to leave the EU, things have moved faster than most could have anticipated. Markets have suffered- the UK has lost its AAA rating and more gloom is in store. The two favourites for Conservative Party leadership, Boris Johnson and George Osborne, do not want David Cameron’s job and Theresa May has emerged as the front-runner. The future of the UK – as a political unit as well as its membership of the EU – has never been more unclear. Or at least that threatened to be the case until France and Spain put paid to the idea of Scotland remaining in the EU and instead reprimanded Messrs. Jean-Claude Juncker and Martin Schulz for giving Nicola Sturgeon an airing in Brussels.
For the moment at least, we must assume the UK will leave the EU as electors demanded last week. Of course, many still hope there might be a way out of Brexit – that a combination of regret at a misguided decision, economic turmoil and tough negotiating will somehow reverse the result, and the UK will “remain” in the EU. Of course, if the new Conservative leader were to call a snap election, a Labour Party led by an actually electable leader – let us say David Miliband – campaigning on a Remain ticket could, if successful at the ballot box, simply refuse to ratify Brexit. Today, Theresa May might give assurances to her Base that there will be no election until 2020 if she is elected head of the Conservative Party, but who knows what tomorrow might bring?
So where do we stand today one week on from the referendum? Britain has a lame duck Prime Minister, Scotland is threatening to hold an independence referendum, Sinn Féin is calling for a referendum on a United Ireland, and there is a dearth of real political leadership on all sides of the political divide at Westminster. Neither is there clarity on when Article 50 will be invoked or who will be in the government presiding over negotiations. Across the Channel, no unanimity exists on exactly how conciliatory or tough on the UK the EU27 should be. At least one continental foreign ministry has today suggested to us that, even after invoking Article 50, the UK could change its mind up until the very last day.
On one side of the spectrum, in the run-up to a presidential election, François Hollande needs to show the French electorate that anyone who leaves the EU will pay a dear price in order to deter them from voting for the National Front. “Contagion” from Brexit must be avoided at all cost. Whilst in the run-up to a General Election in Germany, the Finance Minister, Wolfgang Schäuble, stresses the need to learn the lessons of Brexit and confidently asserts that “More Europe” is not the answer to every problem. Of course, Germany fears losing vital trade ties with one if its biggest markets.
Yet there is some agreement on the Continent: all agree that the UK cannot have full access to the Single Market without respecting the “four freedoms”, including freedom of movement. Or do they? Cracks are even appearing on that fundamental principle as Michel Sapin, the French Finance Minister, claimed that everything will be on the negotiating table.
The EU27, publicly, expect the UK to invoke Article 50 the day a new Prime Minister is sworn in – yet several candidates, including frontrunner Theresa May, have suggested the UK may wait until the end of the year before officially beginning negotiations. This delay might allow for some stability to return to the UK’s politics and take the emotional sting out of the debate but drawing out the process might further sour relations with the EU and, perhaps, prolong uncertainty on the markets.
How can businesses protect their interests in such uncertain times? For now, the priority has to be for companies to lobby those who will inform negotiating positions in UK, EU27 and Brussels to make them appreciate the damage hasty, ill thought-through negotiations could bring. They must push for calm, well thought-out negotiations that will lead to the least disruptive situation possible for trade and investment in the long term. A message must be sent to German, French and Italian officials, in particular, that the UK be treated fairly and a constructive approach taken. Companies from the outside Europe, the UK and the EU27 need to come together and collectively leverage political support on the ground in key EU Member States calling for a non-punitive approach to negotiations.
Business must focus on the post-Brexit reality as it stands today: the UK might have been the key opinion former inside the EU on technology, trade and single market issues, but it might be gone tomorrow. Therefore, they must look increasingly to themselves to defend their own interests. If Brexit indeed comes to pass, it will fundamentally change the EU’s internal dynamics. The EU’s biggest champion of free trade and market liberalisation will be gone and more protectionist tendencies remain unchecked. Sadly, unless everyone sees sense, there is a real danger of a “lose-lose” outcome that will only serve to undermine the standing and attractiveness of both the UK and EU27 economies.
Our lead public affairs and communications consultant in France – Evan O’Connell – has spoken on Brexit in several French media outlets over the past two weeks. Media appearances include:
- France 24 (in French), June 30th (Part 1, Part 2)
- Médiapart Live (in French), June 26th (link)
- RFI (in French), June 24th (link)
- France 24 (in English), June 20th (Part 1, Part 2)
As a company with strong British roots and a presence across Europe, we are ideally placed to help guide corporates through this tumultuous time from a regulatory, political and communications standpoint. One of our key strengths is our ability to communicate the British political situation to foreign audiences, and to communicate and lobby on behalf of clients on issues connected to Britain’s relationship with Europe.
“There is always a well-known solution to every human problem – neat, plausible, and wrong.“ — L. Mencken, 1920
Remember the scene in Jaws when the beachgoers stare, eyes disbelieving, mouths agape, at the pandemonium caused by the shark?
Well, that pretty much sums up the transatlantic reaction to the abrupt and potentially catastrophic decision by British voters to leave the European Union – and not just at 10 Downing Street and the White House, but at investment banks, economic policy foundations, think tanks, corporate suites, media headquarters, et al. Everyone is trying to make sense of what appears to be a profound rejection of global economic integration, “establishment” institutions, “elite” opinion, and the status quo. Whatever you may think of him and his policies, British Prime Minister David Cameron certainly deserved a more dignified departure than being devoured by the beast of Brexit.
Strip away all the macroeconomic and geo-strategic back and forth and the debate over Brexit came down to this: the seductive power and danger of visceral messaging. It’s not exactly a revelation in our digital media and myth-driven age that emotion – if you’ll forgive the verb –trumps fact.
Early on in the debate, the “Leave” forces, abetted by an unsuspecting media, seized the upper hand. First, they took an enormously complex issue and caricatured it, reducing it to a harmless-sounding phrase. “Brexit” sounds like something you sprinkle on your oatmeal, not a painful split that will profoundly disrupt, if not sever, the UK’s economic ties to the world. Once “Brexit” became the all-purpose euphemism to describe the referendum, the “Leave” forces were halfway home.
Consider this: What if the shorthand phrase had been “DivorceEU?”? Think the outcome would have been the same?
The opposition’s other Machiavellian move was to make “Leave” the vessel through which embittered voters could express their frustrations on any and all issues. As my colleague James Hunt, the head of the London-Brussels communications firm Aspect Consulting, told me a few hours after the polls closed: “Britain made its decision based on lies, misunderstandings, and misconceptions. The ‘Leave’ campaign made no effort to tell the truth, or to contextualize; or at least, not when anyone was listening.
“Instead it was all about Britons ‘taking back control,’ and therefore being able to unilaterally stop immigration (which we can’t and won’t), prevent a European army (which wasn’t on the table), and stop sending 350bn GBP a week to Brussels (which is a gross exaggeration; it’s about one-third that amount). The ‘Leave’ campaign knew that most working class voters understood very little about the nature of Britain’s membership in the EU. Although it’s being presented as an elite vs. anti-elite battle, the reality is that a certain section of the elite knowingly spread falsehoods, leading voters to an outcome that many of them now regret.”
The “Remain” forces figured out too late that lofty arguments about reciprocal trade fall flat when the other side is telling voters that the European Union is the bogeyman behind all their ills. Upset that jobs have left your community? Vote Brexit. Concerned about immigrants taking over? Vote Brexit. Want stronger national health care? Vote Brexit.
One of the many ironies of the debate was Google’s revelation that British-based searches for the “EU” or “What will happen if Britain leaves the EU?” went astronomically up after the polls closed. Brits may not have understood what they were voting against but, by golly, they were voting against it! My friend James Hunt isn’t the only Brit who believes that voters are already suffering from buyer’s remorse. Alas, they don’t get a do-over.
From day one, “Remain” should have waged a campaign rooted in emotion, extolling in understandable terms and images the everyday benefits of Britain’s membership in the EU. And on the flip side, they should have painted in dramatic colors the consequences of a “Leave” vote. Not citing white papers from the London School of Economics or the views of this professor or that but tapping working people to talk in simple language about the dangers inherent in divorcing Britain from the EU.
Prime Minister Cameron and the British establishment allowed extremists to define this vote. They didn’t fight fire with fire. They fought fire with salt and very quickly lost control of a conflagration that, left unchecked, threatens to engulf the global economy.
What lessons can be drawn from this debacle? First and foremost, never underestimate the power of emotion in public discourse. In troubled times, especially when “elites” make a convenient foil, voters will seize on the visceral, ignoring facts and logic.
Norwegian-born business communications strategist Rolf Olsen, the CEO of Swiss-based Leidar, observes, “It will be extremely important for the EU leadership to listen and find ways to engage people in Europe in their affairs. One way could be to let people participate in the election of the President. EU leadership failed to unite behind a strong narrative and should feel deeply responsible for Brexit. Hopefully this vote will inspire some positive change in Brussels.”
What H.L. Mencken feared most was democracy run amok, the dire repercussions of ignorance controlling the ballot box. Remember what happened after the beachgoers in Jaws got over their initial shock? They started running away from the water willy-nilly.
Let’s hope cooler heads prevail in the wake of Brexit. The leaders of the industrialized world need to step up and assuage fears.
Donald Trump’s initial reaction to the Brexit vote – speculating about how a shattered British pound might fatten the coffers of his Scottish golf resort – is not likely to be seen as statesmanship in action. But The Donald doesn’t care. Soon enough, he will figure out how to politically exploit – in shameless, emotional terms worthy of the back page of a British tabloid – the meaning of Britain’s defiance.
Secretary Clinton: forewarned is forearmed.
Blog post by Eliot Edwards, Director of Public Affairs.
One might have expected not to be able to pass down Rue du Luxembourg this morning for all the lobbyists turning cartwheels of joy at the news that the UK has turned its collective back on the EU. After all, the major beneficiaries of Brexit will ultimately be the lobbyists and lawyers who will have to plug the breach left behind by all those departing British officials and politicians from Brussels on behalf of their clients. However, this Brussels-based British lobbyist, for one, is not rejoicing, and the mood in the EU Quarter is indeed a somber one. If anyone was in any doubt about Brexit’s catastrophic potential, then one need look no further than the run on the pound overnight.
However one spins it, all parties have emerged weakened as a result of the UK deciding to turn its back on the EU, and uncertainty still reigns. Which is obviously not good news for business, investors or government. Therefore, unleashing its worst regulatory instincts would not now be the wisest direction for the EU Commission to go, but that could precisely be where we’re heading as moves to reassert EU core principles threaten to become a knee-jerk reaction to Brexit. Despite the referendum result, voices both inside the French government and EU Commission assert that ‘’more Europe’’ is the solution to a host of problems confronting the EU. Which could translate in the long term as more regulation for business.
The implications of Brexit for the corporate world are legion of course. Post-Brexit, there could be a kicking out against liberal economic and trade policies associated with the UK in Europe. In regard to TTIP, the pace of negotiations will slow to a snail’s pace now the UK has departed, as both the French and German governments face elections in 2017 and encounter fierce domestic opposition to TTIP. New tech companies from Silicon Valley and elsewhere will discover to their cost that not having the UK on the Council or British MEPs at the EU Parliament means there will be no reliable moderating influence on some of their more protectionist and privacy fixated continental counterparts in Brussels.
So what exactly can companies do to make sure their voices are heard and interests defended? In the immediate term, all companies need to make those negotiating, both on behalf of the EU and the UK, fully understand what is at stake for all concerned. Business voices like Markus Kerber, head of the BDI (the German employers’ lobby), are calling on Europe’s leaders not to risk damaging trade with punitive post-Brexit tariffs – yet there will be pressure from many in Paris and Berlin to make an example of the UK to avoid other countries having the same idea. In the medium to long term, U.S. companies will need to significantly intensify their political engagement in both Brussels and at EU member state level, and they will also have to be readier to enter into coalitions with local actors in member states in order to leverage their domestic political support in Brussels to insulate themselves.
So what now in regard to the negotiations? The unvarnished truth is there is no real precedent for the situation in which we find ourselves today. We can probably expect protracted periods of uncertainty marked by intermittent flare-ups of mutual recrimination and resentment as negotiations unfurl. Much hangs on how the UK’s former partners react to the choice the British people have made and the spirit in which a new Westminster administration negotiates. On the British side, the tone will be set by whoever sits in Number 10 Downing Street.
David Cameron has also just stepped down, meaning this autumn’s Conservative Party conference will look more like the hustings of a leadership contest. A new Conservative Government might not be in place until late November. This could add to the uncertainty and delay negotiations.
The Vote Leave team’s renegotiation roadmap stressed that the process should “not be rushed” but they didn’t seem to taken into consideration the views of those sitting across the negotiating table. Every indication is that Britain’s former partners do not want drawn-out negotiations. Jean-Claude Juncker and Emmanuel Macron are not the only ones in Europe to be terrified by the specter of Brexit “contagion” and a feeling seems to be taking hold that the British need to be dealt with firmly as a deterrent to other disaffected member states getting “uppity’”. Let’s all hope that the voices of the likes of the Markus Kerbers of this world start to be heeded and are heeded soon.
Unemployment rates continue to run high across Europe; 10 June saw the European Commission publish its much-anticipated Skills Agenda. It is a welcome step towards addressing this challenge, and one that will need to be further built upon, writes Alba Xhixha.
Alba Xhixha is Senior Communications and Government Affairs Manager at Aspect Consulting.
Despite a plethora of policy initiatives, unemployment rates have only decreased slightly – at 18.8%, the youth joblessness rate is more than double that of the overall population. The situation is equally challenging for older citizens, who are more likely to suffer from long-term unemployment and are at greater risk of poverty.
Paradoxically, despite the ‘over-education’ in Europe, two million vacancies remain unfilled – particularly in STEM areas such as science, technology, engineering and mathematics. This has huge implications for sectors such as Big Data Analytics for example. Indeed, 40% of European employers say they cannot find people with the skills they need to grow and innovate. PwC’s Annual CEO Survey, published this year, also reveals that 72% of CEOs globally are concerned about the availability of key skills.
To make matters worse, job markets are being transformed by technology and the impact of automation on employment will only increase over time. A recent study by Deloitte showed that around 114,000 jobs in the legal sector alone are likely to become automated, and another 39% of jobs are at “high risk” of being made redundant by machines in the next two decades.
With this in mind, and with an increasingly large skills gap, creating jobs is a bigger challenge than ever for policymakers, especially as labour markets become more sophisticated. The required skill-sets needed are now increasingly broad – employers need people with soft skills who are problem-solvers, analytical thinkers, multilingual, multicultural, entrepreneurial, tech-savvy and team players.
The newly launched Skills Agenda recognises that skills development is crucial for meeting this fundamental challenge. This is not to say that Europeans are under-educated: on the contrary, the real question is what type of education we are getting, and whether it adequately prepares us for the labour market.
The skills mismatch is symptomatic of a larger and much more fundamental problem – our inability to accurately anticipate what the labour market needs and adjust our education systems accordingly. The Skills Agenda’s ‘Blueprint for Sectoral Cooperation on Skills’, which aims to improve skills intelligence and address skills gaps in specific economic sectors, seeks to address these challenges. Similarly, the ‘Digital Skills and Jobs Coalition’ action point, which envisages closer collaboration between education policy makers and employers to agree on which digitals skills are needed and how to develop them, is a crucial piece in the policymaking jigsaw.
The Commission should also be applauded for its clear vision on ensuring the skills of migrants and refugees are accurately profiled and enhanced so Europe can fully harness their potential. Studies, like the 2015 Global Entrepreneurship Monitor UK report, show that migrants are more likely to be entrepreneurs than those born locally.
But if the Skills Agenda is to maximise its impact then we also need smarter education – an approach that addresses technical skill gaps, fosters closer collaboration with the private sector, is more hands-on in nature and one that promotes inter-generational exchange, outside the traditional classroom. Different demographic groups possess different skills-sets and all age groups benefit from a transfer of know-how, experience and ideas, thus narrowing the skills gap. Smart education should also focus on promoting an entrepreneurial culture to ensure that both young and old equally have the opportunity to remain economically active whatever the future holds.
Regardless of which side of the political divide one is on, labour market mobility is today a reality and should therefore also be an important part of the Agenda, as some labour markets may have a surplus of some skills but a shortage of others. Policy-makers and education systems therefore have a ‘’duty of care’’ to prepare the next generation to embrace the opportunities offered by the European Single Market and the right to the freedom of movement. That includes focusing on foreign language skills, overseas traineeship programs and the development of soft skills – flexibility, multiculturalism, team spirit and open-mindedness.
Employers will certainly become more demanding and so should we of ourselves. Being prepared is critical to a successful future. The Skills Agenda is a welcome first step in that direction. Its true value, however, will be evaluated based on its ability to deliver real change.
It has become something of a truism over the years to say that the Western Balkan region is often associated with war and animosity. Of course, it is true that ethnic tensions flare up from time to time as some leaders embrace nationalist agendas to cover up their own failings. Others, become increasingly authoritarian, undermining electoral processes and the overall state of democracy- as it is now happening in Macedonia where the Parliament recently called off the general elections scheduled for 5 June as most parties threatened to boycott the vote- criticising the government for failing to create a conducive environment for free and fair elections.
But it is not all doom and gloom in that part of the world. Kosovo is a prime example of a stubbornly pro-EU country where the aspiration for EU accession is pushing the country to transform itself. While Brexit supporters claim that the UK vote may have a knock-on effect on other Member States or even unravel the European Union as a whole, Kosovo is undertaking reforms to meet the political and economic acquis to join the Union.
Undoubtedly, Kosovo’s EU journey will be a long one, but great things have small beginnings. It recently signed a Stabilisation and Association Agreement (SAA), an important milestone for the EU-Kosovo relationship that will help the country continue much needed reforms and stimulate economic growth and job creation. Such agreements have already had a positive effect on other countries in the region, who have seen trade volumes increase by an average of 36% and trade deficits reduced by 4% within five years following SAA adoption.
Despite the many challenges facing the country, EU Commissioner Johannes Hahn praised Kosovo for ‘demonstrating its ability to deliver on key reform measures’ during the very first EU-Kosovo SAA Conference held in Pristina on 17 May. Kosovo authorities have had to make some painful decisions following recommendations from the EU and the international community. For instance, the government pressed ahead and reached historic agreements with Serbia in the face of strong domestic criticism and theParliament voted in favour of constitutional amendments to establish the Specialist Chambers, which will prosecute war-time crimes, hitherto a taboo for Kosovars.
Reforms are undoubtedly already yielding concrete results. On 4 May, the European Commission recommended waiving visa requirements for Kosovars, lifting them from isolation as all the other countries in the region enjoyed visa-free travel within the Schengen area. This would benefit Kosovo and the EU in a number of ways as collaboration in the areas of business, tourism, R&D, technology and education is likely to increase. More importantly, it will give Kosovars a sense of belonging and inclusion and send out a message of hope to a country that has witnessed so much despair.
This month, Kosovo has also a seen dramatic breakthrough in European and World Football associations, UEFA and FIFA. Sports diplomacy is exceptionally important for Kosovo as a means to consolidate its international standing and secure recognition by countries which have so far failed to do so. Ironically, if Kosovo qualifies for the 2018 World Cup, it will make its grand debut in Russia, one of the staunchest opponents of Kosovo’s independence. But such is the beauty of politics.
Albania is also a positive story in the region. Led by Edi Rama, a charismatic artist turned Prime Minister, Albania has seen great progress in the last few years. Indeed, EBRD ranked Albania as the country with the highest number of reforms in the region in 2014. Yet, the biggest challenge facing the current government remains the judiciary system, which Prime Minister Rama has vowed to reform this year. If he succeeds, Albania will likely start the EU accession negations. All eyes are now on him.
These achievements are, in part, thanks to EU’s ongoing involvement in the region. The traditional carrot and stick policy seems to have largely worked. The societies there are now safer, more open and more prosperous than a decade or two ago. Occasionally some political leaders do drag their countries to a political impasse or worse, but eventually the countries get back on track and reach a compromise, often facilitated by the EU. The Union provides a model for them that – despite its many failings – still lights their way. Let there be more EU engagement in the region, not less.
With a possible Brexit looming large on the political horizon, many energy companies, whether oil, gas or power, are becoming increasingly concerned about its negative impact on the UK and broader EU.
They argue that a period of relative stability in which the evolving EU energy market has made a significant contribution to ensuring security of supply, sustainability and lower energy prices, will be replaced by one characterised by greater risk and uncertainty. In addition, the reduced influence for the UK, would mean the EU would lose the weight of one of the key drivers behind energy market liberalisation. But are they right?
In terms of security of supply, the UK is increasingly connected to the continent. Thanks to the so-called gas and power interconnectors with France, Belgium, Ireland and Norway, a significant trade has now grown up and an increasing portion of the UK’s gas and power needs are supplied through these interconnectors. The European network codes, which regulate cross-border trade of power and gas through interconnectors, are crucial and complex issues will arise as to whether or not the interconnectors between the UK and the continent will continue to be bound by these codes.
It is also difficult to predict the extent to which the UK, in the event of a Brexit, will still be able to influence decisions around the development of these codes. Much will depend on whether the UK will negotiate to remain part of the institutions involved, including the European Network of Transmission System Operators and the European Energy regulator, ACER.
But there is now bona fide concern around safeguarding the continued development of new interconnectors, of which there are currently several in the pipeline. Significant up-front investment is required if these projects are to proceed. As all investors like long-term predictability – and Brexit is a major risk factor – investments in these projects could be seriously affected.
Another area of uncertainty relates to investment support by the European Investment Bank (EIB). In 2014, the EIB invested €7 billion into the UK economy and energy projects accounted for around 50% of that. Whether this type of investment will be possible post-Brexit is a real concern, and for those projects that have already secured funding, there is the possibility that a repayment may be demanded.
In terms of gas supply, the UK is increasingly dependent on supplies from Russia, both importing directly from Russia and indirectly via other European countries. Of course, the ultimate aim of the EU’s Energy Union is to loosen Russia’s stranglehold on Europe’s gas supplies by pooling resources. In the event of Brexit the UK would be more exposed from an energy security perspective in relation to Russia and, minus the UK, the position of the EU towards Russia would also be weakened. Of course, Brexiters are fond of asserting that the UK’s fossil fuel energy needs could be easily satisfied by, for example, shipping more gas into Britain from Qatar, but this does not stand up to critical scrutiny.
On sustainability, currently the UK adheres to the EU’s climate and energy policies, of which key elements are targets for 2020 and 2030 for CO2 reduction and renewables. Post Brexit it is unlikely that the UK would radically change its climate ambitions but, given the fact that the UK has never been a strong advocate for EU renewables targets, the abandonment of these targets may serve to undermine the investment climate for renewables.
As far as the EU’s Emissions Trading Scheme is concerned, the impact of Brexit would probably be limited. Given the fact that the scheme already covers emissions from three non-EU countries, and that the UK’s climate policies are inextricably to it, the most likely scenario is that the UK would remain within the Emissions Trading Scheme. The ability of the UK to influence how the scheme develops in the future would however be severely limited.
It has been claimed by Amber Rudd, the UK’s Energy Secretary, that energy bills in the UK would soar by £500 million a year after a Brexit. Many have however argued that this would only be the case if the UK leaves the internal energy market, and it is not clear to what extent that will be the case. What is much clearer, however, is that without the UK, supporters of energy market liberalisation within the EU will have lost a key champion, and European businesses and consumers are less likely to enjoy the cost benefits derived from increased competition and market liquidity.
The uncertainty and increased complexity that results from Brexit, and the marginalisation of the UK in terms of EU policy and regulation, will negatively impact on business in both the UK and EU. If it comes to pass, Brexit will need to be carefully managed if we are to minimise this negative impact. Conversely, a decision to remain inside the EU would create an opportunity for the UK, with support from likeminded countries, to positively reengage in Europe and more proactively push its energy liberalisation agenda.