This morning, we woke up to the first day of a new era. And yet, after years of non-stop Brexit noise and high drama, one of the most historic political events we can expect to see in our lifetime has passed by relatively quietly. No matter which side of the Brexit argument one falls on, there is at least a collective sense of relief that Brexit no longer dominates every conversation, in every sphere of life.
Since the months leading up to the 2016 referendum, we have been taking the pulse of the conversation on Brexit by tracking the volume and overall sentiment of coverage in the mainstream and consumer industry trade press. The appeal to change the topic has been clear to see: coverage of Brexit in the mainstream press has reduced by a factor of 10 in the period since the General Election, versus the run up to the previous Article 50 deadline in October 2019.
Indeed, in the consumer sectors, this reprieve is set to improve short and medium-term performance. This week, the EY Item Club attributed a brighter outlook for the UK, at least in part, to the certainty provided by the General Election about the completion of the UK’s withdrawal. EY has revised its projection for GDP growth to 1.2% in 2020 and 1.7% in 2021 – up from the 1% and 1.5% increase predicted in its previous quarterly forecast.
Compare that to the picture last July, when the BRC reported that Brexit concerns had slowed consumer spending to the lowest levels seen since the mid-90s, with shoppers buying fewer ‘non-essential’ items. No wonder businesses, which spent hundreds of millions of pounds preparing for a number of hypothetical Brexit deals and no-deals, and consumers alike, are letting out a collective sigh of relief.
But, however comforting this period of relative quiet might be, we know that the next round of uncertainty is just around the corner – and the consequences at this stage could potentially be much bigger. For example, a bill passed in parliament last week, which ensures the regular monitoring of food supplies post-Brexit, failed to include a binding commitment to prevent trade deals allowing the import of food produced at lower standards than those to which British farmers must adhere. This comes despite the vocal protests of British farmers, who fear competing on an unlevel playing field, at the same time as losing ready access to one of their biggest trading partners.
Companies throughout the consumer industries are already having to make long-term decisions that cannot wait, weighing up what is certain against what isn’t. Just yesterday, Reuters reported that BMW has delayed the development of its next generation Mini – a decision that will have an impact over many years.
Inevitably, hiring and talent decisions will also be impacted heavily. A topic that keeps coming up in conversations with CEOs and HR Directors whose companies operate in the UK and the EU, is that employers are starting to recognise the high value of EU citizens with ‘settled status’. Whatever the negotiations taking place in the transition period conclude, it is already certain that these individuals will be able to travel freely in both the UK and EU into 2021 and beyond – something that is not yet certain for British citizens, even if it is likely.
There can be no doubt that the outcome of the negotiations over the next 11 months will have a material effect on almost all businesses in our sector – and our sector’s trade bodies are making a case for business involvement in the next phase. Helen Dickinson, chief executive of the British Retail Consortium, has called for a comprehensive trade deal that puts the consumer first to be the most important part of the government’s negotiation. Meanwhile, CBI Director-General Carolyn Fairbairn has made clear that business “stands ready to help cabinet ministers, policymakers, and MPs who will need to consult with companies of every size, sector, and part of the UK, to inform our negotiations with the EU, and beyond”.
So, at this crucial juncture, as an industry, are we making ourselves heard?
As part of our analysis, we have tracked the overall sentiment of Brexit coverage in the consumer industries’ trade press. Here, we have identified a marked shift in sentiment in the period since the General Election, versus October 2019, in the lead up to the previous Article 50 deadline. Whereas in October, positive and negative sentiment were evenly matched, positive coverage is almost triple that of negative coverage in the most recent period. This suggests that, by and large, our sector is indeed more optimistic about this current period of Brexit certainty.
But what about the mainstream press: are the voices of industry cutting through the population at large? The short answer: no. In January 2020, coverage of key trade bodies in our sector and beyond has been minimal in the UK national newspapers.
Throughout various stages of the Brexit journey, we have become used to wall-to-wall coverage on some of the most technical or procedural aspects of the UK’s departure from the EU – whether that’s the Irish border, customs unions or prorogation.
By contrast, in the period since the election, coverage of the next phase of Brexit – in particular, on crucial aspects for our sector such as future alignment and trade agreements – has been dwarfed by other major news stories. Topics such as Iran, Harry and Meghan and the Coronavirus outbreak have dominated the newsstands. In fact, even Winter Love Island has had a wider reach in the UK national newspapers so far this year.
Some might argue that this is no bad thing; playing out the minutiae of each technical aspect of the UK’s relationship with the EU in public was not necessarily helpful in the first phase of Brexit negotiations – and it may well be better that future policy is shaped differently now. The boost to consumer confidence in our industries is obviously welcome too.
What is important, though, is the mood music. We are living through what many commentators describe as a populist political environment. So, while it is important that industry experts are heard by the government – both considering future opportunities and risks – it also matters how well disposed the public is to those businesses and industries.
Over the course of January 2020, we tracked the sentiment of over 2,000 news articles in the UK national newspapers focusing on 50 leading companies across all consumer sectors. Here we find that, encouragingly, positive sentiment consistently outnumbers negative sentiment at a ratio of three-to-one.
Overall, as we enter into the next phase it is clear that a temporary period of certainty is already improving economic confidence and even optimism around the future trading relationships. But, for the consumer industries, the next period will require a very careful balancing act between ensuring that the industry’s voice is heard but that consumer confidence remains high.
Moira.benigson@thembsgroup.co.uk | @MoiraBenigson | @TheMBSGroup
Confirming our commitment to world-class business intelligence systems, from 2012 to 2014 The MBS Group incubated tech-based business intelligence and media monitoring platform Signal AI. Now backed by multiple VC investors, we continue to use Signal’s award-winning technology to further our own knowledge – including tracking sentiment and coverage around Brexit.