Canadian firms could be moving out of the U.K. post-Brexit: Strategist
While Brexit presents uncertainty for some Canadian businesses, one advisor believes there are also opportunities to be found, mainly because of the Canada-EU trade deal.
DJ Peterson, president at Longview Global Advisors has been travelling to the U.K. regularly over the past year to advise companies, investors and political organizations on the Brexit transition.
“You had a seven-year process between Canada and the European Union to negotiate that free trade agreement, which went into force last year,” Peterson said in an interview on BNN.
“The idea that Britain is going to be able to pivot very quickly and negotiate new deals, not only with the EU, but of course with the United States and Canada — very important trade partners — and they want to move fast, they’re actually going to have to offer very good terms to the Canadians. So, you can think of this as an opportunity,” he said.
Official negotiations between Britain and the EU begin Monday in Brussels.
Peterson believes the U.K.’s departure from the European Union could also help Canada attract more business to its cities that would typically go to London.
“Overall, the stature of London has to go down” said Peterson. “It will go down against its European competitors. It’s going to suffer ultimately against New York, and of course Toronto. So these other countries and other cities do have an opportunity now to prove themselves.”
As for the U.K., Peterson says the snap election results, which saw Prime Minister Theresa May lose her majority, weakened Britain’s negotiation power as it prepares for talks. He sees “a very volatile and uncertain transition period” for Britain, which will last many more years than expected.
He does expect some Canadian firms to move employees or entire offices out of Britain.
“If you look at the larger Canadian firms, one in 10 of their employees are EU nationals, so what are they going to do? It’s not clear that they will be allowed to stay,” Peterson said. “If you’re trying to do business in the EU out of a base in London, that’s going to be much harder.”
Peterson highlights that auto makers and manufacturers, in particular — businesses “that have very complex supply chains, that have very large EU footprints” — will be thinking about where to base their operations.