Belluzzo – International Partners -“Tax and Legal Update 2021”

Brexit and the COVID-19 pandemic have surely been two major events that had serious repercussions on the world of business. 

For my business the Brexit impact had been forecast and thoroughly prepared for in good time.  We were in the fortunate position of already being a global business in a highly regulated and complex sector – used to meeting and exceeding multiple and differing national standards to allow us to work smoothly outside the European Union.

With regard to Covid, my business is an essential one.  Without cable other essential businesses can’t carry on so, while there were challenges, we met them head on, providing PPE, safe practices and easily accessible and frequent Covid testing.  

Yes there was a cost but people are the business and the cost of protecting them was not only essential for their welfare, but essential for customers, supply chain stakeholders and anyone handling goods in transit.    

Port authorities, training and recruitment of manpower at import and export destinations, regulation, understanding and compliance all need support, all need to be got right.  Container ships in the wrong places, lorries backed up on motorways, extra layers of administration.  These are current problems for many.  We will get through them.  They will find a level.  Change is never easy.  Planning and time and feeding back on experiences, good and bad, is the way to lead change for the better.

We have been forced to take a break to move from our London office but work has continued and the real effect – the majority of it – was and still is Brexit, covid didn’t do anything, Brexit was the biggest challenge.  In all industries.  We have seen enough all around the world, the maritime sector is moving up, international trade is moving up but not the UK because it’s lost the largest market, which was Europe.  We need to invest, sort it out, move on, next 2 – 5 years, in particular next 1 year big reduction on internal competition.  We’ve seen consolidation in mergers and acquisition and we’ve seen companies go.  We have to sort it out.

 SUSTAINABILITY: PEOPLE, PROFIT, PLANET

Thinking about the “reopening” of the business, Tratos has developed a new, clear, and holistic strategy; a sustainability strategy that is included in all the aspects of the business and aims at creating sustainable people, profit, and the planet.

Sustainability in its broadest sense will be the key to success when the world re-opens for business.  I am not anticipating a ‘return’ to normal.  I’m planning for a new normal which will accommodate uncertainties that will gradually shrink as world health and economies adjust.  

No one predicted the collision of two ‘perfect storms’ for Britain.  So now it is about People, Profit and Planet – I would argue that for it to work effectively we have to put ‘Planet’ first.  Our planet has just delivered one of the strongest reminders that it is bigger than mankind. 

During periods of lockdown we’ve had time to take stock – about business, international trade, family and the future.  While we all strive to work more intelligently, we have to learn to manufacture, produce, transport and consume friendlier, more gently and with respect too.

I’ve taken the decision to actively push delivery of the UN’s 17 Sustainable goals within my company and in the way I live.  It’s not enough to simply ‘sign up’ to support these goals.  Supporting an idea isn’t realising it.  Realising it means something and what we’re here, talking about today, is around working up new ways of doing business, new ways to trading globally.

Digital Age Thinking

Another important factor to consider is the role of the digital.

This is a digital age and the era of the Fourth Industrial Revolution.  The pandemic pushed opportunities for fully digitally enabled companies to the surface.  Cream rises they say.  

Those who have embraced the technology are already way out front and confident that their development will be driven by it.  The movement of physical goods isn’t a particular problem for companies in this sector, it’s just another pitfall the tech sector is completely avoiding.

Businesses in the software and services space will face other challenges.  Red tape will still be an issue – so will be data adequacy. Of course, Italians have always been innovators.  One of the reasons we feel so at home in the UK.

The others include an inter-twined and ancient history during which the Romans did much to develop the modern and universal business model as the Empire built roads, towns, infrastructure, politics and war – and made time for the arts and culture.

We introduced the first banks, created safe ways to move money around during dangerous times, and were at the forefront of world exploration – the British were already leading the way in the maritime endeavour.

Looking Ahead

Looking at how the UK will look like in the next 3-5 years I always start from my business and its characteristics such as being an Anglo-Italian firm.

The UK’s Italian business community has been well-placed to offer insights and guidance to the UK Government and companies as ministers continue to drive international trade deals.  These deals are important.  They’re aimed at keeping the country on the front foot as a valuable trading partner and the UK economy on track.

Britain is comfortable with a lively and diverse commerce culture and has long been a hot-house for entrepreneurs from both home and abroad.  

Economic growth has its roots in independent businesses.  Small and medium-sized businesses are where the big businesses come from.  Most of us would agree the nation will find other, better, ways to flourish as its Single Market ties shrink and they are replaced with longer, stronger bonds.

Who better to turn to at a time like this than the companies and business-owners who have a valuable dual perspective?  The people who are, themselves, testament to the special relationship the UK and Europe has enjoyed for more than 70 years.  

The UK Government recognised the value of that perspective and I have been privileged to be one of those helping Westminster shape new trading partnerships as an advisor to the Department for International Trade, working with the International Trade Secretary the Rt Hon Liz Truss and her team.

It is important to hold onto diversity.  It’s where ideas gain momentum and When the right people are in the right roles certainty and speed conjoin to deliver right-first-time relations that will only strengthen with time.  And, of course, the UK has to get this right.  There will be no second chances.

Many of us are invested in the old and established trade links.  But the landscape has changed.  The familiar markets are still there but the routes have changed, wrapped in red tape and squeezed by unwanted and, likely unwarranted, additional costs and time.

Time for Reinvention

It is now time for reinvention. 

The health of our domestic economy affects us all.  Now the Brexit deal is done we are in a reinvention period.  We have to shift our sights from short-term thinking and raise them to the horizon – take the long view.  

What this Government has been good at doing is looking to those closest to the economy’s bottom line – you and me – and asking us for our experience-based advice on how to move forward.  

The Government wants to work with business.  That is always a good thing.

Yes – there are challenges.  But in some areas business confidence is now at its highest level since the summer of 2018.  The Government’s escalating of its vaccination programme plays no small part in rising optimism as it looks to a goal of having vaccinated the adult population by the summer. 

While the pandemic is still the next 12 months’ main source of negative impact on business performance the vaccine rollout is likely to be its biggest friend.   

Settling down period 

More than half of businesses are confident about short-term growth and Brexit concerns have fallen to their lowest ever level even though more than a third admit they accept trading with the EU will be more time-consuming. 

And it’s those increased costs and red tape that will consign some long-standing European trade avenues to history – and uncover new and viable markets.  

UK EU exports saw a huge drop in January after the transition through the Brexit barriers closed.  But there is no doubt that there are opportunities.

North America has overtaken the EU as the region seen as offering best trade prospects right now, but the change process is not at an end – in fact, in spite of the pace of the Government’s trade deals, the likelihood is that the change is only just beginning and will continue to grow.   

Balance in business, in spreading risk, in finding the right talent for the right roles, in creating profit. All of these are best served if we are fishing for them in the biggest pond, where the waters meet, the home of the biggest fish.  And to me that supports the increasing march towards globalization.  Be warned though, that journey has to go hand in hand with sustainability. 

Reputation does have value, even in today’s rough waters.  Before Brexit, the UK was one of the world’s leading financial centres, with its London Stock Exchange in second place just behind New York’s Wall Street.  And today, well it is still there.  Still, Europe’s biggest financial centre and globally ranked number two.  Brexit and the pandemic notwithstanding, Britain’s financial credentials and world ranking have endured – but the East is closing in fast.

Investment in infrastructure, investment in staying connected and investment in skills are how the UK will stay ahead.  Just a couple of weeks ago a survey of 5,000 world business leaders found that post-Brexit Britain was a more attractive investment proposition than its Single Market self.

The vaccine roll-out here too has sparked an uplift in confidence as companies look to longer-term planning.  And overseas investors are still attracted by Britain, home to some of the world’s most innovative countries.

As innovators let’s innovate with the end in mind.  Sustainability gains are everything. Sustainability credentials add value, to the seller and to the buyer, and to every world stakeholder.

Let’s start by looking at fairer taxes, taxes that are impossible to avoid, taxes that push better outcomes.  In the future, I’d like to see a CO2 emissions-based tax system.  The dirtiest businesses, the highest consuming businesses pay the most.  That’s a powerful incentive – and it’s one that’s very difficult to argue against.