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What Impact Will Brexit Have
on the Security Industry?
» » WHILE THE EU REFERENDUM ASKED
a very simple question, the ramifications
have been anything but. It’s still unclear
whether we’ll even reach a deal to shape
our relationship with the EU once we
have left and that threatens to throw UK
businesses of every size into disarray.
All that uncertainty has posed a
number of complex questions about
the implications of Brexit and made it
very difficult to predict exactly what the
consequences will be. Mike Smith - senior
director of Company Debt, one of the UK’s
leading insolvency practitioners – predicts
there will be pros and cons of leaving
the EU for every business, but here, asks
specifically ‘what impact do we expect it to
have on the UK’s security industry?’
THE SECURITY INDUSTRY AND
THE WIDER ECONOMY
The wider economic consequences
are not forecast to be favourable in the
shorter term while firms adjust to a new
way of working. The Treasury estimates
that leaving the EU will damage the UK’s
economy to the tune of between 3.4
percent and 9.5 percent of GDP by 2030,
and it’s thought those predictions are far
from unreasonable. Given the economic
fallout of the decision, it’ll probably
come as no surprise that the majority of
businesses of all sizes were in favour of
remaining in the European Union.
DAMAGE TO THE SERVICE SECTOR
According to figures from the
Organisation for Economic Co-operation
and Development (OECD), the UK is the
world’s second largest net exporter of
services, with the security industry very
much a part of that. Most existing trade deals
with the EU also require the free movement
of people and common regulations.
After Brexit, the EU will have to negotiate
access to the European single market and
that could put it at a disadvantage when
compared to its EU rivals. The result is that
Brexit could make life much more difficult
for security businesses that export services
from the UK.
ACCESS TO LABOUR
One of the primary political arguments
for Brexit was to regain control of our
borders. The UK security industry relies
heavily on labour from the EU. In fact, of
371,266 licenses that have been issued
by the Security Industry Authority (SIA),
just less than 15,000 of those have been to
holders of EU passports. By limiting the
number of people that can come into the
country from the EU, security businesses
in the UK fear they will struggle to hire the
employees they need. The dearth in the
supply of foreign workers is also likely to
push up the cost of domestic employees,
thereby driving up the costs of businesses
in the sector.
ADDITIONAL IMPORT TAXES
One of the most significant advantages
of the UK’s membership of the EU is the
ability to sell goods and services freely to
consumers within the EU without having
to pay additional taxes to import those
goods. Free trade agreements also mean
that any tariffs are waived, which further
helps to maintain the competitiveness of
UK security firms. The vote to leave the EU
puts that at risk and we will have to wait
until the terms of the UK’s withdrawal
from Europe are finalised to see what
solutions, if any, are put in place.
LOCKSMITHJOURNAL.CO.UK | JAN/FEB 2019
THE PROSPECT OF WATERED-
DOWN REGULATIONS
EU legislation has had a significant impact
on employment rights in every sector,
including the security industry. Equal pay,
maternity rights, health and safety, TUPE
protections, public procurement and the
right to information and consultation have
all been influenced by the EU. Being a
reluctant regulator in the past, there’s a real
risk that the UK government could oversee a
watering down of employment regulations.
While that may lower costs for British firms,
it will also reduce the level of protection UK
security workers receive.
RESEARCH AND INNOVATION
The EU has tripled its research and
innovation budget over the last decade
while UK investment in the same area has
fallen to just 0.55 percent of GDP. That’s
less than the 0.8 percent average among
other advanced nations.
The UK has secured around 16 percent
of all EU research and innovation funding,
which includes up to £100m of research and
development in ADS sectors. Leaving the EU
will create a funding shortfall for innovation
that the UK government acting alone will not
be able to fill. That will lead to an inevitable
reduction in research and entrepreneurial
activity in the security industry.