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Will UK Businesses Look to the US Rather than the EU Post-Brexit?

29 August 2017, 18:00 CET

There's much to be decided when it comes to the UK's future relationship with the EU. With politicians locked in talks between now and March 2019 - when the UK is due to leave - much attention will focus on the results of these all-important meetings on both sides of the Channel.

From the EU's perspective, the new relationship with the UK will determine the future for about €320 billion-plus worth of exports to the UK – and the €260 billion worth of imports that come the other way.

UK businesses are already said to be spending significant sums in preparing themselves for the future and will be keen to guard against a new relationship that damages that trade.

But is there a danger that the UK will try to prove that it can benefit from its new post-Brexit outlook by turning away from the EU and forging an even closer link with the United States?

Why the UK might bank on better US relations

There's a cultural allure to the United States that makes it seem like a 'natural fit' for many people in Britain. The 'Special Relationship' is often talked up by politicians but these days refers to more than just a strategic and military alliance based on mutual interest – with everyone from businesses to pop stars seeing that to 'break America' would be extremely lucrative, with a vast market that could lead to great riches.

Practically, too, there's the simple fact that there are no language barriers for UK businesses in America.

Politically, there'd be no bigger fish in the sea than the US – and a trade deal here would certainly turn heads and create confidence that the UK could thrive, especially given the concerns raised by Remain voters in the UK. This is why we've already seen UK politicians laying the groundwork for talks with the US.

Why it won't be easy for the UK to turn to the US post-Brexit

Yet, before the EU gets too concerned, there are factors that could well stop UK businesses turning away to the US.

Firstly, it's easy to overstate the links between the two countries. Yes, there are cultural and linguistic ties between the UK and US but the way they do business is very different. That includes everything from boardroom culture to the legal and tax framework, to workers rights right down to the administrative paperwork typically used to perform every business tasks. These are very different systems – meaning that the position starts from a trickier base that the EU, with rules that have been understood and used over time. On top of that is sheer geography. The distance between the UK and US – and the time zone factor – creates complications.

There are also plenty of people in the UK who are wary about the intentions of the US. From the recent headlines about the chlorination of chickens to the concerns over the potential privatisation of healthcare, not everyone in the UK is in a rush to do a deal, especially if it's a bad one.

Then, of course, there's the 'Trump factor'. It's hard to see if this would be a good or a bad thing when it comes to UK/US relations. The US President has spoken favourably about Brexit and hinted that he would like to do a quick deal with the UK once it leaves the EU – in contrast to Barack Obama's pre-referendum warning that the UK would be at the 'back of the queue'. But the President is also an unpredictable figure and there are many in the UK who are wary about being seen to get too close to a controversial figure.

Of course, until we get more details on the UK's new relationship with the EU it's impossible to know how businesses will react. While the US clearly has its attractions, a closer relationship with America is certainly not without its down sides and it's hard to imagine that UK businesses will have much desire to turn their back on the EU.

The EU needs to be careful not to damage trade with the UK during negotiations, but shouldn't be frightened by the prospect of the US taking that trade away with ease.

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