FOR IMMEDIATE RELEASE
Paul Oggelsby heads up the very successful UK-based IT services company Riverlite, based in Cambridgeshire. Riverlite delivers enterprise-grade IT services to UK
organisations, either on-site or through the Riverlite Private vCloud - supporting the running of over £1 billion worth of UK business, 24 hours a day, 365 days a year
As a business leader, Paul was keen to seek the views of directors from other businesses, academics, colleagues and friends on how Brexit will impact the UK in order to prepare for potential changes to our business landscape. Last week Paul also attended a meeting with an eminent Economics Professor at Cambridge University who’s been collating data and reviewing information since well before the referendum took place. From his research, Paul has formulated an interesting picture.
"Essentially the economic facts of coming out of the EU are so negative for the UK and Europe they predict the 3 other G7 countries within the EU will negotiate directly with the UK (second largest economy within EU behind Germany) outside of the EU. The EU is completely reliant on the big 4 (Germany, UK, France and Italy, in that order) and will be forced to change/start again. Whether you voted for or against Brexit, I think it’s very easy to imagine that situation. "
Based on Paul's post Brexit discussions, he shares insights as to the likely cycle of events that will follow, as predicted by leading economists he has spoken to:
* Reduced Investment:
An uncertain period leading to a pause in business investment. Already some people have reported that International companies are delaying contracts with UK companies. (BBC news 30th June)
If this period of uncertainty, delayed contract etc lasts for long it could lead to an increase in inflation
* Increased Interest Rates:
Whilst the Bank of England is currently forecasting a decrease in interest rates, if we do hit an inflationary period, then they may be forced to increase interest rates in response
High interest rates squeeze expenditure and in the past have lead to rises in unemployment. Added to that big companies are starting to talk about pulling out of the UK. Vodafone warned it could move its headquarters from the UK depending on the outcome of Britain's negotiations to leave the European Union. They employ 13,000 people in the UK, but only obtain 11% of their revenue from this country. Already they have announced that they will start to report in Euros instead of Pounds.
* Skills loss:
UK economy and prosperity relies on a foreign work force as our birth rate is too low. Leaving EU could mean that skilled workers will leave/not come into the country, and the Health Service in particular would be impacted.
* Tax increases:
Having reviewed the figures, the Professor Paul spoke to estimates a minimum tax increase of 6% to combat the above.
* Depression. He went further to describe a real threat of a depression for 10 years as any shrink in GDP cannot be tolerated with the current high deficit. Already, Mark Carney, the Governor of the Bank of England has announced on BBC's Newsnight that “In my view, the economic outlook has deteriorated”.
* Time to negotiate effective international trade deals. The UK civil service has not had to negotiate significant trade deals for 40 years because the EU has taken up that role. As we no longer have the skills or experience, it could take 10 years to relearn and recover.
* Loss of GDP. The same Professor calculated that we could lose 7% of UK GDP as the global financial centre will relocate to Frankfurt or Ireland (£3.5 Trillion per day)
*International threats. The serious threat of Putin and a second cold war will be aided by a split Europe.
* Loss of funding. Cambridge University alone is set to lose 350m Euros a year in grant funding from the EU.
As the above is so negative, the Professor Paul spoke to believes that if we move fast with a new leader we will be able to renegotiate with the other main players and a new Europe will be formed. A new referendum could be set to ask people to reconsider their views.
All of this of course will take time to come to fruition. So what do we do in the meantime? We all have businesses to run and families to care for.
"I, for one, am not adopting a “wait and see” approach. I am acting on the information I’ve gathered and taken advice of people whom I respect…here’s what I’m doing to strengthen my business"
Here's a run down of Paul's key focuses post Brexit:
Consider how investments are funded. Of course, being in the IT business we strive to ensure that we have the latest equipment and everything is in tip top condition. That needs considerable investment – some of which we made in the past year, and we have plans for more in the future. We’ve been funding many purchases of hardware for our data centres, laptops, phones and other equipment in ways that avoid capital outlay, but in a way that helps preserve our strong balance sheet. As a result, we will continue to invest in new equipment but retain our strong financial position – which is an important factor in providing the confidence that large companies need when they are considering hosting their systems with us.
Keep data in the UK. Owen Rogers, research director of 451 Research’s Digital Economics Unit told Computer Weekly that post Brexit, UK users of cloud computing are getting less power per pound. “On the day of the referendum, £1 would have bought 18.5 hours of operating a US-based, medium-sized virtual machine, based on 451 Research’s Cloud Price Index Today, that same pound will only buy you 16 hours,” he said.
Keeping data in the UK achieves three things in Paul's eyes:
- Known costs going forwards (no exchange rate fluctuations to be aware of)
- Security - thankfully as we operate our own private cloud services hosted in the UK, Riverlite don’t have to worry about whether its data centre offers the right level of security. We KNOW it does!
- Compliance – who knows what the future holds for agreements over data security with data held in other countries. For a long time, financial services companies and others have been reluctant to use data centres in the US because of the lack of provision for compliance with the Data Protection Act. What will happen when we are no longer part of the EU remains to be seen.
- Business process reviews. We continually assess our business processes here at Riverlite to ensure compliance with our ICO certifications, but that assessment goes much further to review efficiency as well as compliance. Riverlite will be looking at how we make our business operate as efficiently as possible without compromising on quality and customer satisfaction. Paul is adamant that he will continue to invest in people and systems that make this business more efficient to weather the inevitable storm that we are poised to enter.
In summary, Paul concludes: "In short, I believe that in what is probably the most uncertain economic time we have faced since the second world war, heads of businesses in the UK have to ensure they are in as strong a position as possible to face whatever happens next."
Marketing and Communications Manager
Tel: 01480 278750
Riverlite delivers enterprise-grade IT services to UK organisations, either on-site or through the Riverlite Private vCloud - supporting the running of over £1 billion worth of UK business, 24 hours a day, 365 days a year.
With nearly ten years’ experience as a cloud IT Managed Service provider, Riverlite are experts in its field, supported by a strong background in service delivery.
Riverlite know how important IT is to an organisation. The business has been built by offering the very best solutions to meet customers IT needs, with impeccable customer service to match.
Riverlite has a long established credibility in the delivery of IT Managed Services and is proud of the approach it take and the impact it makes in a multitude of sectors, including financial services, the care sector, educational institutions and retail environments.
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