Pragmatism Required

The leading European equipment leasing Blog
Posted on October 10, 2016 | , ,


With elections, both Presidential in the USA, and national in Europe on the horizon, uncertainty is spreading. The word uncertainty is a word that business does not like to hear, it normally means reduced investment in new equipment and projects.

If you think that this is just applicable to the UK, you are very far off the mark. Uncertainty is also in Europe, countries like Sweden could see a large drop in exports, as Sweden’s exports to the United Kingdom amounted to $9.8 billion or 7% of its overall exports. We are in just behind Germany who have 7.3% , and it is not just Sweden, the sherry manufacturers in Spain have estimated that their sales could fall by as much at 15%.

I have just returned from The Netherlands, again very concerned as they export 9.5% to the UK. France and Germany again about 7% of their exports. The sobering fact is that 53% of our imports come from other EU countries, according to the latest figures, that amounts to £290 billion.The UK exports about £200 billion, but 80 % of that will be services, like banking and currency dealings.

Whilst I am a strong believer in the EU, I take with a pinch of salt when countries like France and Belgium, state that they wish to punish us. The question is, with stagnant EU growth, could they really afford to? You cannot keep members in a club by using threats.

Something that has not reared its head yet  is the UK’s binding requirements to the EU budget for the next 2- 3 years. This amounts to at least £20 billion. This is not just a very simple divorce, but an incredibly complictated one, and crucially, with 28 parties who have to agree!

I think that it will be soon time for a pragmatic approach from all parties. This I suspect will only start after the German elections in November next year, but the French elections early next year could shine a light on the possibility. I think that we might hear a lot of bluster from all sides, but this is definitely not the solution.

Megaphone diplomacy, has never worked if you look back at history, sorry, I forgot, politicians have never looked back at history to learn by other’s mistakes !

In this uncertainty, there are currently huge opportunities for exporters to take advantage of the fall in Sterling to undercut other EU companies. If you couple this with an European leasing option, you have a window of opportunity. I have no idea of how long this could last, but my grandfather would say, “ make hay whilst the sun shines”

I think to summarise, uncertainty could spread doubt, but it also has opportunities! When the dust settles, and we have left the EU, whilst neither side will claim a victory, I predict that it will be a score draw. Any other result would be defeat to both parties, and neither the U.K. or the EU could financially afford such a defeat.

I am writing this from Schipol, for one reason. A large Dutch medical company chose Oak to be it’s leasing partner, in Europe, but also the UK. Together we have to be stronger than being divided. That gives me optimism that the uncertainty which we feel now, is only for a time, and as we all know too well,

Time passes. “Tempus fugit!”