EY Global Managing Partner for Client Service, Ernst & Young Global Limited (EY)
Andy Baldwin on CNBC-TV18
Andy Baldwin, Area Managing Partner for EMEIA, talks about the political and business outlook in the UK following the June 2017 ...
Transcript (13 segments)
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Interviewer0:00
Joining me is the EY managing partner for Europe, Africa, and India, Andy Baldwin. Andy, thanks very much for joining us here on CNBC TV18. Everyone's talking about the UK election, so that is going to be my first question to you. I mean, this is another instance of the poll getting it wrong yet again, but what does this sound mean as far as the Brexit negotiations are concerned? I mean, she was going into the record negotiations in about nine days from now with the fact that she's lost majority. What will it mean? That's really going to be the key question. The stance of the Conservative and the Labour Party was for a hard Brexit in terms of exiting the single market, exiting the customs union, and controlling immigration. The interesting thing will be with the need now to build more parliamentary consensus around the negotiating stance. Will that see a softening of some of those principles? Will we see the government being prepared to make a contribution into the European Union to retain some form of access? Will we also see potentially some softening of the opinion on the immigration stance? So I think our business is going to be looking for how quickly do we get a new government and what's the opening position of the UK government in those negotiations, because the European position is very clear. Will this change mood as far as the nuclear option on immigration is concerned? Because you know you put out an EY European Attractiveness Derby and it's looking good for your of.
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Andy Baldwin1:19
Today, yeah, I think one of the things you'd have to say is both businesses and investors are becoming used to dealing with uncertainty. Growth over the last 12 months has held up remarkably well since Brexit. Yeah, I think our hope and expectation will be that through this period of uncertainty, business confidence remains high and we continue to see the growth continuing. And as you said, the recent growth barometer report we publish showed that start-up confidence in the UK was the highest anywhere else in the world. So we're hoping to see that confidence continue, and continue to see the UK economy grow as we go through these very difficult next couple years of negotiation.
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Interviewer1:52
So what about the eurozone? Because record pace of FDI into Europe. UK of course as we pointed out continues to be the top FDI destination, followed closely by Germany and France. We've got a new president in France as well. You know, what's the mood like when it comes to both inbound investment into Europe, and where are we seeing the money coming?
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Andy Baldwin2:13
You'd have to say it's overwhelmingly positive on Europe. Our report showed that number of projects and investment at an all-time high, 260,000 jobs being created. Where's the investment coming from? US continues to be a significant investor, as is China, as is India, and as is Japan into that. But also, unless is crucial, as we've seen a recovery in the European economy, we're also seeing a lot more investment within Europe for Europe. So the biggest single driver of investment within Europe is actually the German economy, the UK economy, and the French economy. So a lot of investment being reinvested in the single market, reflecting the fundamentals of the single market.
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Interviewer2:48
What about India?
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Andy Baldwin2:50
Well, in our report, India shows the highest growth ambition amongst the middle market companies, which for me is reflective of a lot of the sectors that are showing the most growth: business services, technology, incredibly strong for India. We're seeing that in the Indian economy, but also from an export point of view. And also our research shows the most important thing for companies is talent. India is producing more qualified STEM students than almost any other country. So I think the prognosis for India for me is very, very positive.
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Interviewer3:16
Okay, and in terms of global growth, how do you see Africa contributing?
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Andy Baldwin3:20
Well, I think with Africa, what we're seeing is the African growth is far more varied across the continent. You know, three or four years ago during the period of Africa rising, we saw Africa as a continent overall very strong growth. We're now seeing it being very selective in specific markets, and I think we expect that will continue for the next couple of years. So it's about picking the right country rather than saying the African continent will grow as a whole.
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Interviewer3:44
You know, the debate on hard Brexit and soft Brexit is perhaps back on the table now. But you talked about some of the dilutions where maybe we will see to resume in her current after give in to immigration for instance, purporting right maybe we don't know. But how do you see the debate on soft versus hard Brexit now playing out?
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Andy Baldwin4:06
Well, I think the dichotomy between a soft and a hard Brexit is a bit misleading and a bit of a misnomer. Maybe you look at sort of immigration. I think people would accept there needs to be more controls around immigration. I think from a business point of view, sadly from our EY perspective, we employ 84,000 people in Europe, 14,000 in the UK. High-skilled immigration for us is absolutely key, not just within Europe but also from being able to bring talent over from India, from China, from Asia. So I think it's a much more nuanced discussion around immigration. I think single market access really again depends on the sector. Some sectors it's really important, for other sectors it's less so. So I think we'll see a number of sectors continue to grow and grow strongly even if they don't have single market access.
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Interviewer4:51
So my final question then, in terms of business confidence, is 2017 shaping up to be significantly better than previous?
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Andy Baldwin4:58
Yeah, I'd say I'd certainly say if you look at Europe, all the data points, the signs that we're seeing is we cover the European economy more generally. Because record levels of investment, business confidence in Europe will come through. The geopolitics piece is very strong. Clearly how Brexit negotiations play out between the UK and Europe will be a key factor in 2017 going into 2018. Big risk, I think the big risk is a Brexit negotiation which doesn't conclude to a satisfactory trade deal, or where they have a breakdown of negotiation or breakdown of talks. That clearly for me would be one of the bigger risks facing the UK economy.
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Interviewer5:30
Well, we hope it doesn't come down to that. Andy, thanks very much for joining us here on CNBC TV18. We appreciate your time.