Will Brexit Affect the Reputation of U.K. Businesses?
The United Kingdom is scheduled to finally leave the European Union on January 31 of this year, nearly four years after Britons first approved the departure in a majority vote. It has taken three prime ministers, two additional general elections, and numerous false-starts for the U.K. to reach this stage.
While leaving the European Union may be the will of the people, confirmed by the most recent General Election, it poses reputation risks for both the British government and the country’s businesses.
The U.K.’s global reputation challenge
Every year, RepTrak assesses the view among the general public from the former G8 economies—Canada, France, Germany, Italy, Japan, Russia, the U.K., and the U.S.—toward more than 55 countries. Using the RepTrak model, we can understand the emotional connection people have with each country, how it is perceived on three key reputation drivers (Appealing Environment, Effective Government, and Advanced Economy), and the level of support each country enjoys.
Since the initial Brexit vote in 2016, the U.K.’s global reputation has declined from strong to average, and it has lost places in the 2019 RepTrak country rankings.
The U.K.’s reputation is not consistent across the former G8 nations, however. In France and Germany, two key European partners that will have a significant influence on the future Europe-U.K. relationship, the U.K.’s reputation has declined significantly in the past year. This follows protracted, difficult Brexit talks and the U.K. delaying its departure.
Outside Europe, the United Kingdom is beginning to struggle, too. The American public, who once viewed the U.K. as having an excellent reputation, have downgraded their view to strong. In Japan, perceptions of the U.K. have weakened to average.
Of the three areas of reputation we assess, it is in perceptions of having an Effective Government where the U.K.’s reputation is declining most as views harden against the policies of the British government and its ability to implement them. Years of delay, government defeats in Parliament, and political uncertainty have taken their toll.
The U.K. government aspires to build a “Global Britain” that looks beyond Europe for trade and partnerships. Countries with strong or excellent reputations are more attractive for investment, business partnerships, tourism, and study. For the British government to achieve its post-Brexit ambitions, it needs to rebuild its reputation.
The reputation challenge for British businesses
While business trade and lobbying groups have expressed a clear preference for a negotiated trade deal with the European Union, few individual businesses or leaders have taken a public pro- or anti-Brexit stance.
There are exceptions, of course: Tim Martin and his JD Wetherspoon pub and bar chain, Anthony Bamford and his manufacturing company JCB, for example. But for most businesses, a political decision that splits the country 52 percent to 48 percent is too polarizing, too controversial, to involve their companies.
Global banking giant HSBC’s ongoing campaign to highlight the international influences on the U.K. is one example why. The bank’s advertisements, which center around the message that the U.K. "is not an island,” received blowback on social media, with some claiming the campaign is anti-Brexit. At the same time, others have called it “brave.”
Despite HSBC’s denials that the campaign is related to Brexit, most businesses aren’t publicly taking a stand on Brexit either way. Expect other business-led comms campaigns promoting brand Britain—creativity, innovation, cultural legacy, and soft power—to remain neutral, and be distinct from current government policy and Brexit.
Opportunities for global businesses in the U.K.
British businesses that operate outside the U.K. have a unique opportunity. While views of the U.K. for having an Effective Government have declined, its standing when it comes to Appealing Environment (in terms of culture and lifestyle) and an Advanced Economy (with well-known brands and cutting-edge technology) both remain strong.
According to the International Monetary Fund (IMF), the U.K. has the world’s sixth largest economy—second only to Germany in terms of European markets—and is home to London’s global financial hub. Little surprise it is a significant market for many global businesses.
While the U.K. public voted to leave the European Union, there is no evidence that this is part of a trend toward isolationism or a turn against international business. Instead, Britain remains very open to international companies.
According to the 2019 RepTrak U.K. reputation study:
Nine of the top 10 most reputable U.K. businesses were international.
Among the 40 companies to achieve RepTrak’s highest classification—excellent—in the U.K., the majority were based overseas.
Businesses based in the U.S., France, Germany, Netherlands, Switzerland, Denmark, Sweden, South Korea, and Japan all achieved top reputations in 2019 in the U.K.
So, while it will take some time for the dust from Brexit to settle, the effect on British businesses does not appear to be as dire as some might expect. For now, the British public remains open to multinationals, judging them fairly based on their products and services, whether they behave in a responsible manner, and deliver on a clear purpose, and not based on country of origin.
Whether this continues in the future, however, is still anyone’s guess.
Laurence Stellings is a Vice President based in The RepTrak Company’s London office. He previously worked in the U.K. political polling industry, leading projects in the 2010, 2015, and 2017 general elections, and the Scottish independence and EU membership referendums.
Laurence Stellings Vice President, U.K. and Middle East The RepTrak Company email@example.com @LaurenceThinks