The BREXIT Road

Posted on May 10, 2017. Filed under: Uncategorized | Tags: , , , , , , , , |

For some people in Britain as well as parts of the European Union, the general feeling towards the EU project can be possibly be summed up, more or less as that, the EU leaders continue to remain disconnected with the reality, and  fail to grasp the reality on the ground.  Some do argue that, by coming across as being acting elitist, the policy makers are destroying competitiveness of European business.  The evidence is that, across industries, the cost of compliance for European companies has increased significantly year-on-year.  And instead of using BREXIT as an opportunity to fix a very inefficient system, the leaders keep talking in terms of rhetoric.

I firmly believe that, no one in London wants EU to fail, and it shouldn’t, because it has delivered peace across Europe. But European Union as an idea is full of flaws, and just ask those, who paid and continue to pay the human price for being a European. My own assessment is that, BREXIT isn’t good for UK or the EU, and that’s the reality, but it’s also an opportunity. European Union badly needs reform, and its not that Europeans have started falling in love with Brussels post BREXIT.

As I see it, Britain is getting out of European Union and not the continent of  Europe. So lets have that perspective. I don’t see European Union working out in its current shape, and the four principles that EU leaders keep talking about, are completely unsustainable together, because they create serious misallocation of resources. There was no socioeconomic impact assessment done on expansion of European Union, we all know what happens to a Company that goes through a expansion drive, without a well thought out strategy. So why not fix the flaws, and then sell the product wisely to the public, and let’s see if the potential customers buy into it?  No point lecturing  people, if they reject your product or fail to understand what you are selling,  and providing a good customer service is key to making a product work.

 European Union as a product will need to evolve , and it will be good for European politicians to understand that, the language of business as well as science still remains English, and that’s not going to change in the foreseeable future. Also London will continue to remain an attractive jurisdiction, and the world of finance will continue to be dominated by English. The opportunities are still out there, and I sincerely hope that, politicians across Europe including the U.K. will come together, to make good of those opportunities, and maximise it for their shareholders, in other words, the common citizens.

Also to some extent, people in Britain fail to understand that, in continental Europe, there is a genuine love affair with the idea of European Union, and that is, for a number of reasons, which I won’t go into. So yes, like any love affair, the journey will be driven by emotion. And it’s not that, the average people don’t understand that, there are serious design flaws with the idea of European Union, but when you are in love, you are in love. And, I think, Britain will do well being mindful of this fact, while negotiating its exit from the EU. Also, on the British side, there are people who are extremely attached to the idea of Great Britain and its glory. So there are emotional attachments on both sides, and yes I fully appreciate that, the will of the people has to be enforced, and it should be, or what’s the point of a democratic system. But when we are talking about a permanent change, the prudent thing to do, will be to keep the emotions aside, and have a boringly dispassionate approach towards figuring out a way forward that works for all sides. No point being nasty, in the end, we will have to learn, to live with each other. Europe needs Britain and Britain needs Europe, it’s just a fact, and we shouldn’t be confused about it.

By over playing their hands, both sides is taking the risk of doing permanent damage. Love affairs can get nasty, and quite frankly Britain’s relationship with the EU was never based on love. But British diplomats and the politicians do need to factor in the reality that, whether it’s Mr Juncker or Mr Tusk, there is a genuine love affair with the idea of European Union. And we need to learn to respect that love, instead of criticising others for being in love. What we are looking at today is, potentially a lose – lose outcome for all sides, and it’s hard to practically see otherwise. And that’s why it is important that leaders in European Union, instead of punishing Britain for not being in Love, try to understand that, sometimes relationships don’t work, and also sometimes people do patch things up.  Also, why not make some changes, to accommodate each other, after all that’s what a good relationship is all about, or am I missing something ? There is an opportunity, so why not make the most of it ?

Government officials across European Union, are all making concerted effort in figuring out, what they can do to attract businesses, to move from london. And their pitch is not bad at all, but as a business, you have to ask yourself, do you buy into a series of promise or do you wait, to see how much of what is being promised will get delivered on the ground. I am afraid, the reality is, it will be a big struggle for a single European city to replace london. Because london built itself over hundreds of years, into what it has become today, and quite frankly, it’s a daunting task for one European city to replace London entirely. So yes, bits and pieces of what london is offering can be moved to other parts of the EU, but that won’t be enough for a business really. Also a major issue is language, contrary to what politicians in the EU might say, the language of business is English, and there is no way, you can force the world to change to French now. And I am beginning to also sense that, there is a genuine fear among some bureaucrats in Brussels that, if Britain makes a success of its exit from the EU then, others will most likely follow.

So with all that, here are some ideas worth looking into, while UK is on the BREXIT Road.

  • lower the corporate tax rate to 18%
  • provide 2- years tax exemptions on profit of startups with 5 employees
  • lower the personal tax rate for people earning over £ 350,000  to 36%
  • lower the personal tax rate for people earning between £ 50,000 to £ 150,000 to 30%
  • keep the basic rate for people earning between £ 12,000 to £ 49,000 around 20%
  • people earning £ 45,000 and over will pay £ 25 flat access fee for GP and A&E visits and £ 35 access fee could be charged to non residents.
  • a stamp duty surcharge of 5.5% could be levied on non resident buyers of residential properties in the U.K. This surcharge could be used to partially pay for building more social housing.
  • working with the depart of trade & industry create a business mentorship program, where business schools from across U.K. could partner with SMEs, to provide them free of charge essential advisory support on how to grow and better manage the business. Business schools with the support of department of trade & Industry could mentor existing SMEs, and help find ways to grow sustainably.
  • set up a £ 5 billion business support fund, in partnership with private sector, to help fund start up investments requiring £ 30,000 to £ 750,000 in seed funding. The trust acting on behalf of the government could take 25 % of the exit value, in order to generate profit. This fund could be funded by a combination of surcharge of 1.5% on Tobacco and from the profit generated by exiting the investments in the startups as well as allowing councils across the UK to support and subsidise startups.
  • expand the capacity at both London GatWick and Heathrow, to ease the congestion
  • dial down on the cost of non critical regulatory compliance on businesses and the cost of compliance on businesses
  • work out a deal with the EU to access the single market by paying an annual membership fee. UK runs a trade deficit with the EU, and it is in the interest of European Union, to not lose a market that imports around £ 290 billion in good and services from the EU annually. A short term disruption will result in very sizeable job losses and also closings of businesses across the EU. Many SMEs that are reliant on selling to their customers in the U.K. will have serious losses, so it’s in the interest of EU, to work out a deal on trade.
  • reposition London as the offshore hub  for YUAN, Indian Rupees and other important emerging currencies by supporting their capital market transactions through london, a common regulatory framework could be worked out in partnership with regulators from key emerging countries, to enable companies from these key emerging markets, to access capital as well as other vital resources through London.
  • make it easier for people with high skills and high net worth to come and live in the UK
  • develop key cities across U.K. for sectors that will play a dominant role in the future, for example, make parts of U.K. the hub for AI related technological developments as well as space among others
  • pitch Oxford, Cambridge and Edinburgh as technology centres of the world
  • enable partnership between schools and businesses, to help with skills development
  • to help build the soft power of London, help create legislation that will enable non governmental organisations from across the world to house their outfits in london.
  • help UK based premier Universities and colleges to attract the brightest minds from across the world
Advertisements
Read Full Post | Make a Comment ( 1 so far )

Talking about globalisation, productivity and Universal Pay

Posted on January 20, 2017. Filed under: Uncategorized | Tags: , , , , , , , , , |

For starters, what is globalisation ? And is there a metrics that can help us measure the level of globalisation ?

The standard acceptable definition of Globalisation is that, it is a process that has enabled interconnectivity, thereby increasing trade and exchange of ideas as well as cultural experience among other things. Globalisation, as a process spread over 100 plus years has made the world richer, in terms of GDP. The process has also enabled the local champions, to become international bigwigs. And these international bigwigs have then, gone on to influence the change, or in other words, the process that, we have learnt to call ” Globalisation “.

To understand the affect of globalisation, we could look at how our main cities and societies living within those cities, have today become truly global, and therefore globalised in their views. So starting with New York City, which has an estimated GDP of around US$ 1.5 trillion, followed by Tokyo with an overall GDP of approximately US$ 1.4 trillion, and then London with an estimated GDP of approximately US$ 700 billion, followed by Paris with an overall GDP of around US$ 625 billion. And the other emerging global cities including of Delhi, which has an estimated GDP of around US $ 368 billion, are all bigger than some countries, in terms of their economic size. These city economies have reaped the benefits of the relatively freer flow of people as well as ideas supported by flow of capital from around the world. And it is quite safe to assume that, majority of the people living in this global cities, will have a favourable view of globalisation and the interconnected world.

Capital and ideas do not have geographical boundaries. Any attempt to limit or restrict the flow of capital along with ideas will only stifle progress, and it also goes against the natural evolutionary process. Over a 100 year period, human productivity, which is generally measured as a ratio of total output versus total Input, has benefited tremendously from innovation. And we are slowly reaching a point, where in certain sectors of the economy especially manufacturing, humans productivity as well as efficiency is no longer able to compete with the automation process driven by robotisation. Also, there will be increasing pressure on human as a labour force, to continuously reskill themselves. We may work longer, but on a lesser pay ( in terms of overall living standard ) than the previous generation. Technology may have made our lives easier, but it hasn’t increased the overall disposable income of people in general. So, a sizeable percentage of the population within our society will continue to feel under constant pressure. And this pressure and feeling of being slowly eroded isn’t all due to globalisation. The answer and the underlying reasons are more complex than some of us would like to suggest or believe.

The society that, we live in and along with it, our economies changes over time. And that’s part of the natural evolutionary process. Our body changes as we age, that’s how the biological process is designed. We aren’t physically capable of doing things that, we could do as a 16 year old, at the age of 60. So, we learn to adapt accordingly. Humans and humanity’s ability to adapt to change has been at the forefront of our evolutionary advancement. And the next generation of humans will have to be much better equipped than us, to stay relevant. Genetically speaking, humans are 99.99% the same, but we are still different in many ways including in our overall level of individual productivity. Not all the work force doing the same job, will have the exact level of productivity.

A human life is, more of a marathon than a quick sprint, and in the end, how we run the race decides where we end up. And the idea that, governments and political leaders can somehow help us stay in the race by changing the rules of the race in our favour, isn’t a permanent solution. We may get tempted to vote for those who identify with our problems, but the solution to the problems won’t come from pushing back against the natural evolutionary process. To facilitate a change, we must be prepared to change. And to change, one has to be ready to adapt to the changes.

Universal pay guarantee for those living below a specified and tested poverty line, could serve as the spring board, to help support those who may start to fall behind in the race. The fact is, not all of us will win the race, but we could try to finish it, without worrying about our individual ranking. We join the race, the day we are born, so we don’t really get to choose. But we can learn, how to run the race better. This is where, the society and governments could help, and they should.

Read Full Post | Make a Comment ( None so far )

Liked it here?
Why not try sites on the blogroll...

%d bloggers like this: