Thursday, July 14, 2016

Designing the Exit Strategy for BREXIT: The Top College in Delhi NCR Speaks on Theresa May

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.