The British car manufacturer and leading UK exporter BMW has announced to workers and unions that it will shut its main factory in Oxford for a month as a contingency plan in case of a No Deal Brexit. Business analysts and newsroom pundits will be holding their breath in case of a media snowball, and Remain-supporting agitators will be seeking to draw maximum political capital from the story, seeking to depict the incident as the beginning of an impending period of chaos.
With an agreement between Brussels and No. 10 over the future relationship still elusive, optimistic Brexiteers may feel a tad embarrassed – when advocating a Leave vote several, including former Brexit Secretary David Davis, insisted that BMW would lobby the German Chancellor to guarantee an agreement that would keep supply lines in operation and goods on the road. Now this star company is creating contingency plans for a negotiation failure, the optics are not great.
Cue the inevitable cacophony of “I told you so” articles, tweets and press briefings by those determined to talk down Brexit. Already Sky political editor Faisal Islam has posted a stream of tweets that aim to raise the alarm, provoking fears of an effective shutdown of the traffic over the English Channel. George Osborne, the editor of the Evening Standard, is sure to squeeze the story for all it’s worth.
The pundits should be cautious, however. First, this is merely an annual closure that has been brought forward. Businesses make it their business to plan ahead in order to minimise costs, enhance logistical efficiency and manage risk. BMW will have been briefed by a team of management consultants and policy wonks that bringing forward the closure represents insurance against potential chaos in March, should Downing Street fail to get an agreement with Michel Barnier, the EU chief negotiator.
The move will be costly – Sky News says “millions” – but “millions” must be seen in the context of a company with a market cap of $55 billion. Moreover, the cost will have deemed worth it given the uncertainty that is sure to continue between now and the UK’s exit next year.
Furthermore, the fact that BMW are (sensibly) planning for No Deal does not mean that No Deal is going to occur. Only this week the EU has shifted its stance considerably on the Irish border question, raising the likelihood that a solution can be found. Theresa May is faced with rebellion from the Tory Right and a Labour Party committed to voting down any deal, but when faced with a deal-or-no-deal vote in Parliament there is every chance MPs will rally behind the prime minister to avoid further commercial disruption.
Any major change to the rules of international trade, especially when there are complex, cross-border supply chains, will bring disruption, but businesses undergo disruption all the time. The difficulties implied by a decision do not themselves undermine that decision. The business community spends its time finding solutions to complex problems of law and of regulation and entire industries are devoted to navigating these rules systems. UK businesses already spend billions on compliance with EU rules – the source of administrative costs post-Brexit will simply be different. However, if Britain pursues a deregulatory future, these costs may have an end to them, leading to a commercial environment that is more – not less – business friendly.
Brexit could be a great opportunity for capitalism if the government is confident and commercially minded. Short-term disruptions are to be expected given the magnitude of the enterprise, but once the transition is out of the way, the potential rewards are great.
