On 29 March 2019 Britain will officially leave the European Union (EU). The process of leaving the EU is unprecedented, causing a period of great uncertainty for businesses who are having to reassess their mobility activities in the United Kingdom (UK) and Europe. As the negotiations continue, some aspects are becoming clearer. One such feature agreed upon by negotiating parties is to enable a transition period until 31 December 2020, meaning the ramifications of Brexit in March 2019 will not take effect until January 2021.
While shifting the goal posts further away may provide some Brexit relief, a high degree of uncertainty remains, and the consequences of this ambiguity are being felt throughout the global mobility sector.
Prime Minister Theresa May has consistently maintained that securing the status of EU nationals in the UK and UK nationals in the EU will remain a top priority throughout Brexit negotiations. An agreement in principle has been made on the rights of these two groups currently residing lawfully in the UK and the EU, affirming that they will be able to remain in their place of residence and enjoy broadly the same rights and benefits as they receive now. However, this arrangement is subject to the caveat that nothing is certain until a final agreement is reached on all the matters pertaining to the UK’s withdrawal, and a lot of anxiety remains within these two groups about how they will be affected. According to a 2017 KPMG study, 35% of EU nationals living in Britain indicated that they were considering leaving the UK, and 49% of EU nationals living in the EU reported that, as a result of Brexit, Britain had lost its appeal as a place to work and live. This downward trend is also reflected in the findings of the InterNations Expat Insider 2018 survey, which ranked 68 common expat destinations worldwide. The survey report shows that the UK is now ranked in the bottom 10 expat destinations (down 5 places since 2017, and 26 places since 2016).
International Talent Drain
While it’s so-called business as usual until Brexit comes into effect, there is no denying that companies are in limbo. Until discussions are concluded and clear decisions have been made, and despite securing the status of expatriates being a top priority during negotiations, businesses are wary of the uncertainty surrounding Brexit when making hiring decisions, as are professionals when making decisions regarding their career. Although the full effect of Brexit remains to be seen, it is certain that sourcing and retaining international talent is going to become increasingly difficult for companies in the UK and Europe. A CBI survey indicated that 82% of large UK businesses have set up an internal taskforce to project manage Brexit preparations, and 77% of all UK businesses surveyed are already looking at what consequences Brexit will have on their access to people and talent.
The exodus from the UK is not just limited to EU workers, as a number of high-profile companies — including HSBC, Barclays, and Lloyd’s of London — have started shifting part or all of their business and roles to other European cities. While EU companies continue to move out of the UK, companies based in the UK have had to start increasing their prices to offset potential extra costs associated with Brexit. According to a survey conducted by the Chartered Institute of Procurement and Supply, 11% of responding companies have already started shifting part of their workforce out of the UK, and 32% of UK businesses have increased their prices to consumers as a result of Brexit.
More Disruption to Come?
As Brexit negotiations continue, the UK’s decision to leave the EU is already having tangible effects on British and European companies and nationals. While significant uncertainties remain, one thing is for certain — over the coming months businesses can anticipate more disruption and change in global mobility, international recruiting, and talent retention.