Dr Carmen Stoian, a lecturer in international business in the Kent Business School comment on the latest multi-national to plan a move out of the UK.
‘With the Brexit deadline approaching fast, more foreign investors are choosing to move their European headquarters away from the UK and into the continent. This trend now features investors such as Unilever, Ferrovial and today Panasonic. And this trend is very likely to continue, as other investors such as Vodafone are considering similar moves.
‘The paradox of this is that one of the triggers of Panasonic’s move is the UK government’s decision to lower corporation tax, one of the very measures meant to make the UK more appealing as an investment destination post-Brexit. Research shows, however, that low corporation tax only acts as an incentive for investors when the ‘fundamentals’ are right. For example, US and Japanese investors have traditionally set up their European headquarters in the UK as a stepping stone for investment into the Single Market.
‘With full access to the Single Market very much in question after the end of the post-Brexit transition period the UK is losing one of its most important location advantages that may appeal to foreign investors. No government policy can compensate the UK for the loss of full access to the Single Market, the second largest market in the world by economic output.
‘Another paradox is that the government knows this and is trying to keep trade in goods as frictionless as possible with the EU post-Brexit while also aiming to deliver on the promise to stop the freedom of movement of labour of EU citizens into the UK – something that is enshrined in the Single Market principles. The fact is that, as noted by Michel Barnier, the Chief EU negotiator: “The Single Market means single market … There is no Single Market á la carte”.
‘The last paradox is that post-Brexit Britain aims to strengthen its economic relationships with non-EU partners – but with the loss of full access to the Single Market, one of the UK’s most important location advantages, enhancing these new ties may need more persuasion than previously assumed.’
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