Arun Sudhaman 11 Jul 2016 // 8:38AM GMT
It has been more than two weeks since the momentous vote that saw the UK public choose to quit the European Union. Since then, economic instability has been the order of the day, highlighted by a plunging pound and concerns over growth and cohesion.
We have already addressed some of the societal factors that helped contribute to this stunning turn of events. Now, we ask PR CEOs what Brexit means for their business and for the wider public relations market across Europe.
'A suicide in slow motion' — Caroline Wunnerlich, MD, FleishmanHillard Brussels.
'Brexit', commented a French colleague rather dryly, 'is like watching a suicide in slow motion.' In just two weeks since the referendum, incalculable damage has been done at an economic, financial, political and constitutional level in the UK. From a communications perspective, considerable damage has also been done to notions of trust, respect, tolerance and goodwill in public discourse. The challenges for the communications industry and our clients are therefore considerable. There is an urgent need to help restore the kind of constructive dialogue which is necessary to move the debate forward.
In this context, strategic public affairs advice tops the current agenda. Organisations are trying to work out what Brexit means for their business, employees, customers, supply chains and investors. So much now rests on what the UK-EU relationship will look like in the future. Clients therefore need to assess what is at stake and communicate their positions and messages to government ahead of any Brexit negotiations starting. While timetables are still unclear, the UK government is already seeking input in order to frame parameters. Most importantly, this input is not just needed in London. It is equally key to gauge the mood and approaches being discussed in Brussels and key capitals such as Berlin and Paris. Clients are realising they have to analyse business, social and regulatory implications and align messages to stakeholders to ensure all sides are equipped to understand the potential implications.
Our public affairs team both sides of the Channel has already been busy with scenario planning pre- as well as post-referendum and we expect the demand to continue growing. There is also considerable interest from US clients and colleagues who are trying to understand the potential impact on trade and investment and to figure out their communication strategies.
'Our industry will benefit' — James Acheson-Gray, UK MD, APCO Worldwide.
Whilst I’m concerned by the broader macro-economic implications for the UK economy of the vote, I actually think our industry will benefit. APCO has joint London and Brussels teams already providing clients with analysis and insight into the various political and regulatory options, working in partnerships with colleagues in other European capitals including Paris, Berlin and Rome to help clients navigate the uncertainty. We are also seeing considerable interest in the impact all this will have from other parts of the world, especially from the US and the Middle East.
In the UK obviously profound political upheaval is underway and a new set of leaders will soon take office. Companies like ours can help others to understand their preferences, priorities and build new relationships. The renegotiation process is likely to be long and unsettling, with corporations and international governments anxious to understand the dynamics and to ensure that they are not disadvantaged. This will be an opportunity for the larger network agencies with strong connectivity and deep political experience.
In terms of the campaigns themselves, my over-riding impression was that neither was particularly good. Why would they be? Both were truly cross-party, compromised by the need to mash together wildly divergent interests. But Leave did better in essentially understanding that Europe was a proxy and this was a protest vote, and they mined disaffection well. For many on the Remain side, there was shock at the result. This I blame on social media groupthink. I encourage you to follow the persuasive work on ‘Emotional Contagion and Group Polarization on Facebook’ by Cornell University, or the Sun’s leader a few days after the vote which derided ‘the social media echochamber which convinced remainers they were on course to victory’. Those words may be partisan, but they are not without truth. The campaign highlighted the transition from mediated information provided by journalists to disintermediated information on selective news feeds — and that can blind people to the bigger picture.
'Business as usual' — Michael Stewart, CEO Europe and CIS, Edelman.
The vote to leave the European Union has created significant levels of political and economic uncertainty not just in the UK but across the entire region and even globally. Extended uncertainty and volatility is never good for the private sector, therefore much will depend on how quickly and effectively the UK government under a new Prime Minister and Europe commence constructive engagement on a new relationship between the UK and EU. To date the vast majority of companies in the UK and across the continent are taking a ‘business as usual’ approach to communications marketing activities and expenditures, and if anything are seeking additional support in areas such as employee engagement, interactions with public sector stakeholders, and in determining whether and how they might take a public stance on the future arrangements between the UK and EU.
'Invest in building up operations in continental Europe' — Lars Erik Grønntun, EMEA CEO and chairman, Hill+Knowlton Strategies
We have entered an extremely fluid period politically, economically and socially in Europe. It was a demanding context for businesses even before Brexit, even more so now. Many questions and uncertainties need to be addressed by the UK government, as well as the other 27 remaining EU governments. While the UK officially still remains an EU member until Article 50 is invoked, and an exit treaty is negotiated, it is clear that the UK’s influence has been challenged by the Brexit vote, and likely will be further. At the same time, EU countries need to try and keep the internal market intact as the referendum debate has fueled anti-EU political forces in other Member States. These far right and far left forces are protectionist, anti-free trade and in favour of closed borders. Nonetheless, everyday EU business continues, from developing the EU energy market, to the digital single market, and the capital markets union. For corporate interests it means they have to navigate in an even more complex landscape the next couple of years.
While uncertainty is bad for business generally, H+K is ideally placed to help companies and organizations through our strong operations in Brussels and London as well as across the rest of the EU. Our clients are asking for our counsel on both sides of the Channel and we expect this to continue. Furthermore, Brexit galvanizes our already strong willingness to invest in building up operations in continental Europe moving forwards.
'The PR industry can often benefit in times of change' — Laura O’Connell, managing partner, Instinctif Partners
We believe that the PR industry is resilient and will withstand this period of economic and political change. We are seeing challenges in some areas compensated by strength in others. So for example while we have certainly experienced a dampening effect in capital markets activity, as investment decisions or IPOs are deferred during this period of uncertainty, across the business clients are continuing to seek advice and counsel – and our public policy teams in the UK and Europe are hugely in demand. For all the uncertainty some now foresee, the PR industry can often benefit in times of change as clients seek further support.
'We are in for a tough few years' — Richard Houghton, Agency Doctor
Whatever their politics, and whether there were for Brexit or Remain, all of the agency heads that I have spoken to in the last two weeks agree on one thing – we have a leadership vacuum in the UK, with the resultant economic chaos and it would seem no recovery plan. So there is no doubt we are in for a tough few years, running up to the negotiation of Brexit, during the negotiations and in the year post Brexit as the UK and international business community work out what it all mean in practical terms.
Like all periods of change some agencies will thrive as they refine their proposition, sales targeting, recruitment strategy and cost base to maintain fees and margins. Many will – frog like – sit tight as the commercial environment changes around them and suffer the inevitable dip in financial performance. While those that have relied on European funded client campaigns will have significant changes to make if the new Prime Minister, whoever she is, does not keep promises to replace European funds £ for €. And let’s be honest, the recent track record for keeping political promises is not a good one.
In the short term there may well be a lift in fees for corporate and public affairs specialists but for the majority now is the time to make sure your agency has a view on Brexit and its possible impact on your clients, and make a judgement call on how your agency will need to operate in a recession for then the next 36 months and in a new normal where it may well cost a lot more to do business internationally.