A no-deal Brexit is unlikely, says UKIBC chairman Mervyn Davies

While a scenario where the UK exits the European Union without a deal will be ‘catastrophic’, such a situation is unlikely, Mervyn Davies, chairman of the board of the UK India Business Council (UKIBC), told Arup Roychoudhury and Indivjal Dhasmana in an interaction. Davies, who is a former chairman of Standard Chartered PLC, and a former trade minister, also said that irrespective of the shape Brexit takes, ties between India and the UK will continue to grow. Edited excerpts:

What are your views on what will happen in the coming few weeks, regarding the March 31 Brexit deadline?

I am a ‘remainer’. I should start by saying I was disappointed with the results. The Brexit vote had as much to do with dissatisfaction with the status quo as it was about anything else. I think we shall wait and watch what happens in the next two weeks. Medium- to long-term, I am extremely optimistic about the UK. But short-term, we will have to see what the effects of the impending deadline are.

Is there a high change of a no-deal Brexit, given that Prime Minister Theresa May has not been able to rustle up the numbers in British Parliament for her proposal?

The reality is that it is uncertain. Do I think a no-deal Brexit would be extremely bad? Yes, it will be catastrophic. I am in favour of a second referendum, a people’s vote. I think Prime Minister May and her Cabinet over the next 10-15 days will face some difficult decisions. But that’s her job. I don’t think a no-deal Brexit will happen. The UK is an open market, rule of law, amazing innovation. I would argue that from April 1 onwards, there has never been a better time for Indian businesses to invest in the UK.

Once Brexit happens, do you feel Indian businesses will move to Ireland or Mainland Europe to take advantage of a lower tax regime and better access to European markets?
 

I don’t think so. Look, there is always competition between London, Dublin, Amsterdam, Frankfurt, and other financial centres. My view is that irrespective of what happens, the UK will be a gateway to Europe after Brexit. It is a logistics hub, it is a service hub. The reality of Britain today is that it is a hugely open market; it is globally competitive. People are being very cautious about the UK, understandably so because they want to see what is happening.  

Considering that India is notoriously slow in concluding free trade agreements or any trade deal, what is the realistic time frame for a trade pact between both nations?

As an ex-trade minister, I would never make predictions on trade deals. One thing I would say is that whatever happens with Brexit, Britain is a trading nation, and India is a major strategic partnership. Based on our conversations with Indian business leaders, their appetite to invest in the UK is huge. The business between the two nations will continue to grow enormously. The bilateral treaties are for politicians to sort out, and trade deals take longer. But trade and business ties between the two countries are set to grow exponentially over the next decade.

Does tension between India and Pakistan scare British investors?

Anybody would be worried. I am a pragmatist. I am optimistic that both countries would see that increased tension is not good for either. We don’t need any more tension.