Brexit – Is risk still risky when you see it coming? | EY

By Simon L. Barberi, Director, Advisory at Ernst & Young

The fate and nature of Brexit are still uncertain. The UK’s relationship with the Union is bound to change come March 2019 and it is important for firms to acknowledge.

This much is true. Yet in the current uncertainty about the final deal, Maltese companies, like all other EU states including the UK, cannot make informed decisions.

For the second year running, the Malta Attractiveness Survey (MAS) event, this year in its 14th edition and happening on 24th October, will feature an expert panel discussion on Brexit and its implications for foreign direct investment (FDI) flows and companies in Malta.

The panel will be a mix of seasoned FDI industrialists and experienced politicians and promises to generate an interesting and engaging debate.

These speakers will be discussing the latest Malta Attractiveness Survey Brexit-related results, the most recent developments in negotiations and what implications these will have for the Maltese economy as a whole and in different sectors.

The discussion is also expected to touch upon the likely financial consequences of the UK’s departure on the forthcoming 2014-2020 EU budget and how Malta should be gearing up to this new reality.

Moreover, Brexit-related results of EY’s European Attractiveness Survey conducted amongst pan-European investors will also be dwelt upon.

It should be noted that for the third year in a row, Brexit-related questions were included in EY’s Malta Attractiveness survey. Prior to the actual referendum in 2016, Malta’s FDI investors were already highlighting their concern on Brexit’s potential implications and risks to their business.

The fear and risk attached to this ongoing development seemed to be largely rooted in the outcome being unknown. Brexit was (and some say still is) a very nebulous concept and means different things to different stakeholders.

This is especially so since there were (and remain) various possible permutations that companies have to contend with.

Fast forward this by twelve months and a more specific and successful Brexit discussion was held at MAS in 2017.

Negotiations between the two sides had by then started, and although the political arena took centre stage, some interesting and controversial economic developments had already occurred.

It was significant to note that although a year had already passed since the referendum, the 2017 MAS survey respondents largely reported no particular effect on their businesses caused by Brexit up to that point in time.

Which brings us to the present and this year’s MAS, themed “Welcome to the Transformative Age”. Now that a further year of EU-UK negotiations has passed, and with numerous policy positions, statements and assessments having been discussed and openly challenged, it will be useful this year to take stock of the respondents’ reactions to the same range of Brexit questions asked to Malta’s FDI investors.

Has Brexit had any direct effect on their businesses already? If so, were they positive or negative? What are respondents’ preferences to augment or mitigate these results?

Moreover, are foreign investors in Malta, in 2018, aware of the potential disruption caused to their traditional mode of doing business than they were last year?

Or are they adopting till this very day, a ‘wait and see approach’? Even at this late stage in this saga, are companies seeing what is coming for them, or are they still hoping for some form of Brexit reversal, as seems to be increasingly mentioned in the media.

For a variety of reasons, it is well known that many foreign and locally-owned businesses in Malta, would rather the UK remain in the European Union.

Companies in the UK have already started implementing transition plans and it is up to Malta to build on its traditionally strong and long-standing ties to assist companies in the UK to tackle this transition.

For further information on the latest edition of the Malta Attractiveness Survey and to register for the conference on 24th October please visit http://ey.com/mt/attractiveness Survey results will be made public during the conference.