How business and professional services are adapting post-Brexit
Since the EU referendum, Barclays teams responsible for business and professional services have been working through the challenges to their clients’ business models. A panel of Barclays experts consider how their clients can make the best of the Brexit deal.
Business and professional services, which include law, accountancy, facilities management and recruitment firms, weren’t centre stage in the Brexit negotiations, but they make up 25% of UK businesses, adding £190bn to the economy. The sectors employ 4.6 million people – 13% of the UK workforce – with two-thirds of those jobs outside London.
A change in the trading relationship with Europe is a big deal for Barclays’ white-collar clients. In the years leading up to the UK’s withdrawal from the European Union, Barclays has held events, seminars and reviews with relationship managers to help companies prepare themselves for the end of the Brexit transition period, and ready themselves for opportunities to enter new markets. But has the implementation of a last-minute Brexit deal led to any change of plans?
Gavin Parker, Industry Director of Business and Professional Services, Barclays Corporate Banking, sees an opportunity for his clients’ firms as relationships are clarified with Europe and beyond: “In a post-Brexit environment, we're going to see a lot of opportunity to increase our trading knowledge and create more specialisms within our economy.
We’re here to support clients in thinking through the impacts of Brexit and how they can take advantage of it.
Head of London SME, Barclays Business Banking
“For example, many of our professional services clients – for example, consultancies, accountancies and law firms – are starting to focus on how they provide advice on some of the current uncertainty, particularly where businesses are considering how they should reshape their international footprint as a result to the change in relationship between the UK and Europe. As new international trading relationships are formed by the UK, these will need to be digested, understood and advised on.”
“Since the referendum, lots of firms have tailored their services to offer more cross-border advice, especially around employment,” adds Harriet Stern, Head of Barclays’ London Professional Services team. “Law firms in particular and also accountancy firms have had to adapt to where the need is.”
Barclays has been working to support clients who have been navigating the impacts of Brexit on the sector. “One of the things we've done is to run a series of national Brexit events,” says Katherine Morgan, Head of London SME at Barclays Business Banking. “In client reviews, we continue to be there for those companies who want us to help them think through how to optimise their business, including through a series of specialist seminars on new markets.”
She stresses that, along with other sectors, business and professional services should consider the ways Brexit could impact their supply chain as a whole.
“What we learned from preparations in 2019 and 2020 is that even if you're not trading cross-border yourself, you may well have suppliers who are, and you may well need to consider your employees and their status,” she says.
Morgan encourages clients to examine all areas of their business: “It’s useful to do a Brexit audit, and we would suggest that you take time to consider how any of the value chains that enable you to do business could be affected.”
John Aldred, also an Industry Director with the Business and Professional Services team, says that “the full impact and ramifications of the trade deal are still being worked through by business services sector clients”.
However, he adds: “Some of the immediate challenges have related to the movement of workers across the EU and the requirement to secure visas and work permits to operate. The falling away of mutually recognised qualifications is also expected to have an effect, but current travel restrictions in place due to COVID-19 mean these impacts have so far been muted.”
In a post-Brexit environment, we're going to see a lot of opportunity to increase our trading knowledge and create more specialisms within our economy.
Industry Director, Business and Professional Services, Barclays Corporate Banking
While clients continue to focus on managing through COVID-19, Aldred says: “Unless active issues are arising, Brexit is almost a secondary focus.”
Aldred believes the end of free movement is still something that can be planned and prepared for, but he says: “It will be a challenge for recruitment agencies specialising in providing workers to sectors reliant on EU migrants.”
Different businesses within the broad sector will experience varying levels of change, explains Aldred. Recognition of professional qualifications will be a concern, and paperwork for exporting services has already increased. Property services may suffer supply chain difficulties, while business services should prepare for higher employment costs and potential hurdles in continuing to outsource abroad. In the accountancy and advisory sector, Aldred says: “There’s little change at the top end of the market, given that these firms already operate as separate business entities in each EU country.”
Parker points out that Barclays’ industry expertise means it is “perfectly placed to be able to fully understand the impacts our clients are going through”. As a British organisation with international divisions, he says: “We’ve built deep knowledge within our bankers and they’ve become market specialists. They know the nuances and the types of requests they can get from clients, and they can tailor bespoke solutions.”
Morgan agrees. “We’re here to support clients in thinking through the impacts of Brexit and how they can take advantage of it,” she says.