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27.07.16

Brexit and new Panama canal both need careful navigation - Amrop Global Conference 2016, Panama

Ray Carolan, Partner Dublin

Thankfully, the lively mix of 104 delegates at Amrop’s Annual Global Conference in Panama provided plenty of colour and interest as the familiar Irish grey cloud cover followed me there. Well, the local monsoon season does last for 8 months so it wasn’t a surprise. 100% humidity, 38° and raindrops the size of golf balls kept us running between air-conditioned safe houses.

There’s always plenty to discover at a conference like this, particularly the inspiring examples from offices who excel at growing their indigenous market share and producing impressive results. Amrop in Canada, Denmark, Peru and Costa Rica stand out as beacons.

The recent practice in Amrop of setting up global centres of excellence in specialist areas like mine - the consumer and retail sector - is robustly underpinning local business.  Many colleagues agreed that accessing knowledge and resources from a pool of experienced people with precise insight into key areas is translating into tangible benefits in finding and placing key talent.

One highlight of the trip was our visit to the Panama canal, a project that the American Society of Civil Engineers calls one of the seven wonders of the modern world. The recent widening to allow ‘New Panamax’ ships to carry double the load of their predecessors has been controversial from the beginning. But, comfortably removed from the concerns about whether the concrete sides will hold or ships will be able to navigate through efficiently, it seemed timely to be there just as this newly re-engineered but historic artery between the Atlantic and Pacific was about to open for business on June 26th. 

Timely also, though a little less comfortable perhaps, was that, as I landed back in Dublin on June 24th, the Brexit vote results were just hitting the headlines. Having a particular interest in the outcome because of the many years I spent living in the North of England, I and my colleagues here in our Dublin office had given this possibility plenty of forethought. I was the only delegate among the Europeans in Panama that predicted a ‘Leave’ outcome.

Clearly, the majority of the business community in the UK didn’t see it coming either. Odgers Berndtson undertook a survey on the upcoming vote a few weeks beforehand. They interviewed 304 directors and executives on the boards of FTSE350 companies. Even though 81% predicted that a ‘Leave’ vote would have a negative effect on investment and 76% said it would have a negative effect on jobs, only 64% of boards had formally discussed it and a meagre 16% had taken an official position on Brexit. 33% were actively making contingency plans for an EU exit but had invested relatively little.

In the same survey, nearly 25% of those interviewed said Brexit would possibly or definitely lead their businesses to relocate. For the many large institutions who rely on the freedom to trade quickly and easily with a market of 500 million citizens, Ireland stands out as a near-perfect new home. We have all the guarantees of a passport to European free trade and a highly educated English-speaking workforce to boot. The international companies who already have a presence here will be wasting no time in scaling up their Irish operations. Financial institutions and tech companies, particularly in fintech, are openly expressing their intentions to move or set up a representation here. More sectors will follow.

IDA Ireland was well prepared to steer things in the right direction with their immediate letter of assurance to the 1,200 FDI companies in Ireland that our commitment to Europe remains solid and that they will work with them to support growth. According to the Central Bank, as of the close of 2015 FDI accounts for €3 trillion of investment funds, money market funds and SPVs. This figure could be set to increase very significantly in the next few years. Similarly, Enterprise Ireland has announced a schedule of 68 international trade initiatives – market studies, trade fairs, knowledge seminars, embassy events and 36 ministerial-led trade missions – to help Irish exporters with market expansion and diversification.

The recruitment business has felt the shudder of an engine suddenly gearing down over the past month; a natural reaction to a period of uncertainty. But we firmly believe that the long-term advantages our market will see will far outweigh short-term wobbles. After some initial hesitancy on what to do next, companies will regroup and redirect strategy. No-one, within or outside of the UK wants to see a movement towards a restricted trading market. Whatever shape EU bureaucracy puts on Britain’s new status, it’s bound to result in an arrangement that supports the level of activity commerce strains for.

We have always had a strongly-interlinked relationship with Britain in talent searches. Brexit has already led our representatives to engage there in an even bigger way and we see this continuing. Whatever direction future activity takes, there will be plenty activity.

Uncharted waters are a manageable threat in the hands of confident and able captains. If our political leaders maintain a calm and measured approach, we’re confident leaders in commerce will navigate the upcoming territory ably.