At
the top college in Delhi NCR, Ishan we have been following the chain of events that have followed
BREXIT. The event is one of historic importance and epic proportions at that.
Not since the end of the Second World War has Great Britain seen itself in such
a quagmire. While it looked like a financial issue, the turn of events that led
to the promise on a referendum by the former British PM David Cameroon and the
results that have astounded many across the world have left room for the
impression that it is a political issue with many dimensions. Now that Great
Britain has its second woman Prime Minister in Theresa May there are some
positive things to look forward to. At the top college in Delhi NCR, we
are attempting an ambitious and intellectually stimulating academic surgery to
diagnose the BREXIT issue and its different dimensions along with the probable
solutions that Mrs. Theresa May may design to streamline the exit strategy. The
BREXIT design issue promises to be a exciting case study in designing an EXIT
strategy from the perspective of strategy, business environment and human
resources management. Take a look.
Trade Policy of Theresa May and
BREXIT
It
may sound paradoxical if not subversive to hop and jump over to trade policy
discussion on day two of the tenure of Mrs. Theresa May. Yet, it makes enormous
good sense to assert that at the heart of the BREXIT is an unhealed wound of a
meagre economic growth rate of 0.2%, one of the lowest in the last eight
decades. Great Britain had virtually surrendered its competitive advantage in
international trade by signing for EU membership. Negotiating a free trade
agreement with European Union requires holding talks with each of these 28
member nations that call for diplomatic talks at government level. The entire
process of signing one free trade agreement with EU takes 6 years. Trade data available
with the Conservative Party shows that more than 50% of Great Britain’s trade
volume is shared with non-EU nations like United States of America, Canada,
India and China. Among all these nations, India takes the highest time to
streamline and finalize a free trade agreement in 3 years while Canada, United
States of America and China do the same in 1 year. Theresa May shall do well to
accept the recommendations of the David Davis Conservative plan to design and
sign free trade agreements with each of these non-EU nations while simultaneously
exiting EU.
FDI and Reclaiming the Industrial
Class of Great Britain
It
is given and granted that London has taken a beating over the issue of BREXIT
as a financial hub of Europe and the world. Many banks, financial corporations,
insurance companies and microfinance institutions may think of exiting Great
Britain and London in particular in the coming 2 years. Their next choice may
be Dublin. What can Theresa May do loss offset this situation? She can design
corporate income reductions to streamline the tax regime and use it as a tool
to attract FDI from the blue chip corporations in the world. Great Britain
houses a skilled workforce that is productive, healthy and industrious. They
can look forward to recreating the manufacturing sector in which Great Britain
had once done exceedingly well. First enable inexpensive import substitution through
a flexible trade regime that allows manufacturing companies to import raw
materials, spares, parts, accessories and value addition components from labour
intensive economies like China and India. Second, offer corporate enterprises a
corporate income tax rationalization program to reduce the corporate income tax
rate from the existing 20% to 15% on EBITDA. Third, laser focus on sunrise
sector verticals like automobile, pharmacy, biotechnology, genetic engineering,
IT and software development and textiles through an unbalanced growth approach
that leverages the high quality social overhead capital left over by the David
Cameroon legacy.
Single Market Access and Using Free
Trade on a Reciprocal Basis
The
EU leadership consisting of the German Chancellor Angela Merkel, the French PM
Francois Hollande and the Italian PM Matteo Renzi will be gunning for Great
Britain to exit early. Theresa May is a known leader in the international
community for her strong bargaining and arrogant, brash and abrasive style. This
must be put to good use by Great Britain to push through bilateral free trade
agreements on a country specific basis. Do not allow the EU members to form a
cartel of sorts to pressurize Great Britain into giving into their demands for
a single market access as it was during the good old days of Great Britain’s EU
membership. The use of free trade on a reciprocal basis focusing in industry verticals
will build the lost competitive advantage in sectors like automobile Most
importantly Great Britain’s great strength is the large population of knowledge
workers and the knowledge economy must be leveraged to build competitive advantage
in select verticals on a reciprocal basis. On the contrary if Great Britain is
forced to a raw deal, Theresa May does not have to be taught to reciprocate in
the same coin.
Poland, Lithuania, Latvia and
Ukraine: Engaging the East
In
terms of foreign policy there are challenges galore. United States of America
mus know and it hopefully does know that they have lost an essential ally and friend
in David Cameroon. In Theresa May, Great Britain has found the British version
of an American Donald Trump. Her priorities would not be to oblige United
States of America but to keep Russia at bay. Four nations are strategically
important namely: Poland, Lithuania, Latvia and Ukraine. It is for Theresa May
to restore confidence to these nations as a military and economic power to
offer them a shield against the expansionist regime of Vladimir Putin. That is
easier said than done though. In the absence of EU, it will not be easy to negotiate
with Vladimir Putin’s Russia.
At
the top college in Delhi NCR, Ishan, we envisage a historic turn of history itself for Great Britain, as Theresa May
takes charge at 10, Downing Street. We will keep updating as events come
across.
