Finn Raben, Director General at ESOMAR BREXIT & RESEARCH
The two highest profile incidences of the impact of a populist vote on a country’s governance, are the Trump presidency in the US and the Brexit decision in the UK; both resulted from very efficient campaigns that tapped into hidden anxieties and frustrations (as well as legitimate grievances), which turned the existing "ruling" order and accepted norms, on their heads. As a result, we can now see that both economies are also in turmoil (US stock exchange far more volatile, US agri-business suffering from reduced international sales), and that the longer-term impact for business is very unclear.
Of the two examples, Brexit is the more intriguing, as it has the potential to re-define geographical, social and economic boundaries, on a scale not seen in modern times. However, before that point is reached, the UK has to undergo a radical re-think of its political and governance structures, which have failed on two, critical points:
- The first was the UK Conservative government’s decision to attribute a non-binding referendum with binding constitutional power. This was a critical mistake, as the referendum result showed stark divisions between countries, cities, socio-economic communities and businesses, and to make the result immediately binding, created (irrevocable?) tensions in the existing governance; time should have been taken to pause, reflect and consider the implications before a decision was made.
- The second was the (subsequent) assumption by the Conservative Party that Brexit could be "achieved" by single party politics. At no point did it occur to the Conservatives that a vote which so divided the entire country, would be equally divisive within the government and civil services. The only solution to populist and divisive positions is to ensure inclusive (cross-party) debate that respects pluralism by engaging meaningfully with the positions of disagreement…..not unilateral negotiation and decision-making. The first-time "inclusion" was referenced, was after the overwhelming rejection of the proposed EU exit deal by the House of Parliament.
Looking at it very simplistically, a country’s ability to function is based on free trade, travel and access to a labour force. Throughout the Brexit process, these issues were never dealt with in serious detail, and the UK government never consulted with UK businesses. Free trade was assumed to be protected by WTO rules; (secure) travel was assumed to be governed by IATA and NATO conditions, and it was assumed that a sufficient labour force already existed. It was also commonly believed that the more emotive "Immigration" issue would simply remove undesirables, but would NOT block (e.g.) nursing staff from Eastern Europe, or hospitality workers from Western Europe, coming to work in the UK…..however, it has now become very clear that the issues are far more complex than that!
In general, business tends to be more sensitive to the potential challenges that might arise from Brexit, than politicians are –regular commentary has been heard from the Financial sector (eg Lloyds, moving to Belgium), electronics (Panasonic moving to the Netherlands), Medical (EMA moving to Amsterdam), Airbus, Jaguar/Land-Rover, etc. etc. all of whom have raised critical arguments and warnings about tariffs, cross-border exports and customs, and the ability to hire/move people from country to country. Businesses have also had to invest more resources in preparing for a "no deal" scenario than the UK government has, for if Brexit does indeed come to pass, then the potential for job losses, loss of government income and taxation revenue, a reduction in available workforce(s) and for a decline in business turnover, will all pose significant, long-term challenges to the UK economy. The current lack of any clarity or certainty about business conditions post-Brexit, has forced many companies to move their EU headquarters out of the UK.
With regard to the Data, Insights and Analytics profession, our sector has been quite forward-thinking, and credit must be given to the MRS (Market Research Society) in the UK, for this position. Since firstly, the institution of the GDPR, and subsequently the Brexit decision, the MRS has been engaging extensively with ESOMAR and other national European associations, to ensure that its conditions for data exchange, data security and data analysis are all equivalent to European requirements. This approach to the Brexit challenge is in stark contrast with the UK government, whose belief in a unilateral approach to defining and implementing a solution has gone very badly wrong for the country as a whole.
While the UK seems to believe that an adequacy decision (i.e. where the EU decides that the UK’s Data Protection laws provide equal protection to the GDPR) will be easy to reach because they already have implemented the GDPR, the withdrawal agreement does not make any references to seeking equivalency or adequacy for the UK. In other words, there is no guarantee that an easy and quick solution will come into play any time soon.
In the case where an organisation currently only has a UK business, and it has grave concerns whether it can continue to trade with the EU ( or may suddenly have significantly reduced access to EU funding for research projects and/or public subsidies earmarked for EU SMEs), then one of the practical steps research organisations may wish to take is to consider establishing an entity within Europe that is able to continue to maintain operations within the EU.
Relying on a Code of Conduct to safeguard data transfers between the EU and UK in case of a no-deal Brexit would thus be crucial, given that other options are very time consuming and expensive to implement. The European Commission is actually working towards a Contingency Action Plan which includes:
- Standard data protection clauses: the Commission has adopted three sets of model clauses which are available on the Commission’s website;
- Binding corporate rules: legally binding data protection rules approved by the competent data protection authority which apply within a corporate group;
- Approved Codes of Conduct together with binding and enforceable commitments of the controller or processor in the third country;
- Approved certification mechanisms together with binding and enforceable commitments of the controller or processor in the third country.
Nevertheless, as one of the first industry sectors to be invited to work with the European Union to develop a "common" research code and certification process, we are optimistic that from a data perspective, the assurances that the UK will be able to give any company buying or selling insight in a post-Brexit world, will be just as good as those that may be offered in Europe. This is an essential development for our sector, for while the UK as an entire economy represents only a little over 2 percent of global GDP, the UK represents the second biggest research market in the world, accounting for more than 14 percent of global research spend.
In the event of Brexit, and in the event of additional tariffs, travel restrictions or new visa requirements being implemented, then access to a multi-lingual and multi-cultural workforce may become more limited, and the role of the UK as a European research "hub" may become significantly less attractive; but this is merely speculation. The entire Brexit process still needs to heal divisions, find greater common support, and achieve clearer common thinking on its end objectives, than anyone in the current UK political structure has been able to demonstrate, so far.