Brexit – The Real Winners

I’m in London this week.

It is not a happy place I’m told. The whole of the United Kingdom is riven and disunited like never before. A vote on membership of the European Union three years ago was billed as a once in a generation vote: a vote that would be “respected” by all.

Three years on it is not just the vote that has not been respected by all but there is a distinct lack of respect in the political discourse that followed on from it. It has all turned very sour while the UK has left nothing – except its collective mind.

However, there has been one big winner in all this.

These are the consultants that are advising industries up and down the land on what will happen next when the UK exits Europe. Over the past three years, these predictions have been made, but as yet have not been tested because nothing has happened. This is one industry that is doing very well as a result of the referendum – and the resultant chaos. Put bluntly London and elsewhere are full of consultants who are making a shedload of money out of Brexit.

This merry band of opportunists are roaming the country telling one company after another on “what might happen.” No doubt this comes with the occasional warning that all the British are doomed and thus the need for yet more services from the consultants.

Sound familiar?

It should do for anyone of a certain age who can remember the so-called: Y2K bug. At the turn of the century, this was also all the rage and also increased the pension funds of many a consultant.

In the run-up to the year 2000 there was an almighty global panic about the Y2K bug. We were told that suddenly computer systems would stop working. That airplanes would fall out of the skies and lights on roads would stop working, trains would no longer run and the financial markets would disappear. This was not so much as a dire warning of catastrophe as a prediction of something akin to the end of the world.

By the end an estimated $300 to $500 billion was being spent preparing for this digital and societal meltdown. Well as it turned out, nothing happened. We all woke up on Jan.1 and nothing had changed except the date. Life went on.

So the Y2K bug was mostly nonsense. Yes, a few relatively minor fixes were needed here and there – aren’t they always? – but nothing much really changed. Still someone made money out of the uncertainty just as some are doing today out of the Brexit turmoil.

The threat back in 1999 was exaggerated. It was exaggerated so that consultants and suppliers could provide equipment, systems and services to counter the threat posed. The bigger the threat posed the bigger the pay day for those who are there to help you with that threat. The only thing is that it was in their interests to talk that threat up. It was a scam of sorts.

Brexit consulting is turning into an epic scam of the same proportions as the Y2K one. Wouldn’t it be ironic if much of the current fears are being stoked by the advice of consultants who are over selling the problem for their own ends?

Consulting on Brexit is now big business. Last month, PwC, one of the largest consulting firms, reported bumper profits and payment to partners of £765,000 each. This was on the back of a 22 per cent rise in consulting revenue. And guess what they were mostly consulting about, yes, you guessed it: Brexit. According to the Management Consultancies Association (MCA), the consulting industry is expanding at the second-fastest rate in a decade. This is largely because of work on the UK departure – no time soon – from the EU.

Of course it is the British government that has been employing the most consultants. Earlier this year, it was reported to have already spent up to £75 million in consulting fees. And this has gone to all the usual big name players: McKinsey, Bain, Deloitte, PA Consulting and EY. And these very same companies will be in turn helping the private sector get ready for Brexit and all the new government red tape that will come with it.

In the past three years, a whole new industry has grown up about how to be a Brexit consultant. If you don’t believe me then Google it. Last time I looked 15.3 million results appeared. The website “Start-Up Ideas” as you might expect knows a thing or two and so rated “Brexit consulting” as one of the most lucrative business opportunities of 2017.

Now, don’t get me wrong some of this advice is not only much needed but no doubt excellent. And yet it is still worth asking whether all this deluge of advice is really worthwhile? Or is some of it making the problem worse? The plain fact being that no one really knows yet whether the UK will actually leave and if so when? And in addition no one is sure what way the UK will leave and so no one can be sure of the impact on business. That much is sure. I don’t need to hire a consultant to tell me that. And if no one really has any idea what will happen next how on earth can you plan for it? A cursory glance at some of the UK government guidance on the effects of leaving bears this out. This ongoing confusion will always allow for the emergent of the “seers” who can peer into the night and tell you what no one else can see. Or so they say. The one thing consultants never say is that all will be well and you really don’t our services.

So what can we learn from this?

Don’t believe all you read or hear and be wary of consultants selling services that they tell you that you can’t live without. Leaving the EU, if it ever happens, will cause some upheaval – no doubt about it. It will involve a re-working of supply chains and the need for most businesses to continue to access the single market. It will also involve putting in place new systems to cope with increased paperwork of new UK government edicts. Important, yes, but life changing – really? Dull and bureaucratic maybe, I’ll grant you, but not difficult tasks for most business people concerned.

From a business perspective all this reminds us that every down has a corresponding up if only you have the eyes to see it. In hindsight, 2016 would have been the time to get into the consulting business – true no matter what you think of them and what they are doing. From a purely business perspective it would have been good because quite simply there was money to be made.

Consulting firms are hyping up the potential problems around leaving the EU. They have turned a series of mid-level administrative tasks into a crisis of political and social import. Okay, great for business and for those end-of-year bonuses but business doesn’t operate in a vacuum. This hyped up and highly emotive fear mongering is not great for the rest of the country, or for the political process either.