Businesses from mom-and-pop size to multinationals have warned that a British decision to quit the EU’s single market will devastate their bottom line, but there’s one industry that’s ready to make a killing: lobbying.
Uncertainty over what will happen after the June 23 referendum on the U.K.’s membership in the EU is already proving lucrative to lobbyists and public affairs consultants in London and Brussels, who say clients are pushing them for contingency plans and scenarios. The political chaos expected to ensue if Brexit really does happen, they say, promises to generate lots of billable hours.
“It would inject a degree of uncertainty in the political system and uncertainty tends to be beneficial from a commercial point of view for a consultancy, because we are there to act as guides,” said Richard Jukes, the U.K. and Ireland chairman of Grayling, who said he will vote for Brexit.
The potential post-Brexit boomlet would come at an opportune moment for the lobbying industry. Consultants say they have been struggling on the EU scene as Brussels dialed back the number of policy initiatives it pushed over the past 18 months. Partly that has been due to the Brexit debate itself — EU leaders haven’t wanted to fuel Euroskepticism in Britain — but partly it stems from political challenges like the migration crisis that have diverted attention from issues with more interest to corporate clients.
Now, the prospect of offering clients high-priced “intelligence” on legislative changes that could affect businesses in a U.K.-EU divorce proceeding has consultants in London and Brussels anticipating a big payday. They are already offering advice on how to react if a U.K. decision to leave the EU throws the bloc into political and economic turmoil.
“Those consultancies that have a Brussels presence would benefit hugely from Brexit because we would have intel coming from Brussels as to what the thinking is there,” Jukes said, adding that his clients in the financial services, hospitality, automobile and entertainment industries are particularly interested in Brexit fallout.
Game-planning
Peter Guilford, a partner in gplus europe, a consultancy headquartered in Brussels, said his clients have requested cost-benefit analyses on either outcome of the vote. Others want to know “chapter and verse” on what actually happens to legislation if the U.K. votes to leave, he said.
Even Hollywood wants to know all the possible angles. Guilford said his American clients in the entertainment industry have been concerned about how the intellectual property debate in the EU will be affected without the U.K. in the ring to fight for liberal copyright laws. He said they fear that the EU political climate will become more Franco-German, meaning more protectionist and less welcoming to American audio-visual content.
“It’s not just about what would happen to Britain, but how would the complexion of the EU change?” Guilford said. “It’s a very political view, at what rate would British influence over the decision-making process subside, if at all, and how they could counteract and make up for that.”
The U.K. hospitality industry is concerned about the possibility of fewer business travelers to Britain if companies move their headquarters from London to other European cities to stay in the EU single market. There’s also concern about the future administrative burdens and cost of employing workers who come from EU countries, such as those who come from Southern and Eastern Europe during high-traffic tourist seasons, according to Jukes.
“If you suddenly find it’s difficult to get seasonal workers coming from the EU, that will have an inflationary pressure,” said Jukes, who added that very few of his clients operate only in the U.K.
Carmakers, and other manufacturers who engage in cross-border trade, are looking at the impact of importing and exporting their goods and services to the U.K., how customs issues will affect annual projections, and if it’s worth continuing to invest in Britain.
It’s all adding to up to what lobbyists say could help be a big boost to the lobbying industry in London.
“You could see a scenario when U.K. interests will have to lobby even harder to get a good deal, because they’ll be on the back end of French and Italian companies,” said Russell Patten, the CEO of Grayling’s office in Brussels.
Good timing
When Jean-Claude Juncker took over as European Commission president in November 2014, he declared his main objective was for the EU to be “big on the big things, and small on the small things.” That has led to a streamlining of regulation, with more than 70 legislative proposals withdrawn by the EU’s executive body. That’s meant less for policymakers, politicians and lobbyists to do.
The same is true in Britain, where lobbying firms say that ahead of Brexit there’s been a legislative “logjam” in the U.K. Parliament over the past year — with fewer laws proposed because of concerns they would be unstitched following a Leave vote. The EU institutions have also tried not to rock the Brexit boat with policies that would antagonize Euroskeptics in Britain.
One lobbying executive, who asked not to be named, said some of his clients requested a halt to any EU activities until they knew the outcome of the British referendum.
“One of our clients is lobbying on energy and environmental issues, but if they are out, it will not make any sense,” said the executive, adding that the client was worried about the possibility of losing out on “a lot of money from the European Investment Bank.”
The slowdown has required some retooling on the part of consulting firms.
Burson-Marsteller cut six employees from the health team in its Brussels office in October 2015 and FleishmanHillard let four people go in 2015 ahead of restructuring in 2016. The head of the Burson-Marsteller office in Brussels said at the time of the changes that the firm was “diversifying skills to reflect the changing public affairs environment.”
Other firms said they are shifting with the times. “Our business is very good but obviously, it varies,” said Philippe Blanchard, managing partner in the Brussels office of Brunswick, who said the firm was adapting to the new environment by adapting its focus.
“Output lobbying is only one part of it, the main objective [of the Juncker Commission] was to reduce about 80 percent of the amount of legislation, so when you have an objective of doing less and there are less proposals going into the system, the Parliament is bored, so there’s less opportunity to do regulatory lobbying.”
Lobbyists looking to capitalize on a post-Brexit boom say the fallout from an Out vote would give them the chance to get back to their core work: influencing legislation. It would also put international lawyers in great demand as they explain to clients what new laws (or undoing of old laws) will hit their business.
The uptick would likely extend over the two-year period it takes for U.K. to decouple from the EU, a process that many lobbyists predict will take longer — and of course result in more billable hours.
But others say the short-term gain for their industry might not be worth the long-terms effects on the health of the EU economy, which is after all, their core business.
“I think Brexit will be good for us in the short term, but there be will so much uncertainty on what will happen,” said Karl Isaksson, chairman of the European Public Affairs Consultancies’ Association, which represents lobbying firms in the EU. “If it will be bad for Brussels and Europe in the long run.”
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