B-School Deans & Profs On The Impact Of BREXIT

The Vote That Will Trigger A U.K. Recession

“In the short term, the Brexit vote will create a climate of significant uncertainty,” believes Professor Richard Harrison, chair in entrepreneurship at the University of Edinburgh Business School. “So those already running businesses or thinking of starting up may delay investment plans, or decide against a new venture. In the medium term, the vote will likely trigger an economic slowdown in the UK, which could lead to recession.

“But historically, we actually find the rate of business establishment actually tends to increase in this environment, because people with less confidence about their job security look to alternative sources of income. Albeit these businesses born out of necessity tend not to be large income generators – typically only creating a modest revenue for their owners. Consequently, in the longer term we could see far poorer economic prospects.”

The Downside of Globalization

“In the 90s, we had a view that globalization was entirely good,” believes Karl Moore, an associate professor at the Desautels Faculty of Management at McGill University who also had taught at Oxford University. “In retrospect, that was naïve.

“This week’s vote of the majority of Britons wanting to leave the EU provides more than ample evidence of the downsides of globalization as, over these last two decades, the lower middle class in the developed nations have too often seen a decline in their relative wealth.

“At the same time the rich have gotten richer. Globalization is much more of a mixed story than we once thought. This week’s vote, the popularity of Donald Trump, and other politicians of his ilk in Europe and elsewhere, reflect the angst of the working class and others, increasingly we are having to conclude, rightly so. As a Canadian senior investment banker told me this morning, “When the animals are well fed, the jungle is quiet.” Many are not eating as well as they did less than a generation ago. Not that I am Trump supporter, but we must recognize the reality of what his being the presumptive Republication candidate means and we need to rethink the global economy and how it works.

“In the UK, where I worked for five years, we see the possible resurgence of independence for Scotland as Scottish voters voted quite differently this week than the rest of the UK. Here in Canada, we see something similar, there’s pressure on the Canadian fabric as Alberta is no longer the rich uncle of the Canadian federation and there is friction between some provinces. We are in a time of considerable flux in the UK, Europe, North America and, indeed, in many other countries. How we have a thriving global economy is now the question put before the House.”

Limited Impact On Britain’s Business Schools

“Finally, the unbelievable happened,” says Christophe Dispas, head of the finance and accounting department at SKEMA business school in France. “The United Kingdom (UK) is about to exit the European Union!

“What are the main risks in the short term? For Europe, the main risk is a risk of credibility : if the UK can go out, why not Greece, Portugal, Spain … or Italy? A strong reaction is expected by the European Central Bank to restore confidence (again!) and avoid a new crisis that could definitely destroy the Eurozone. For the UK, the uncertainties will freeze investment projects in the short term and probably plunge the country into recession.

“And what about the benefits? For the European Union, the exit of the UK could simplify the integration and speed up the necessary reforms to create a more efficient Europe.For the UK, the renewed independency could allow them to better position themselves in the future. In a nutshell, the terrible uncertainties create a lose/lose situation in the short term but also new opportunities for the future.

“The impact on business schools should be quite limited. Universities and Business school are evolving in a globalized world. They know how to cope with borders, visas and so on. Of course it’s a huge step back … but it won’t stop research collaborations, student exchanges and so on. Sure the cost to enter a business school in the UK should increase when the UK exits the European Union … unless new agreements are concluded! Maybe the job opportunities will be more limited in the UK the years to come … but it could be compensated by more opportunities inside the European Union!

“Brexit won’t stop the globalization and diffusion of knowledge.”

David Cameron Blew It…For Himself And For His Country

“Brexit is not only bad news for the European  Union, it is also bad news for the United Kingdom,” writes John A. Quelch, the HBS professor who was once dean of London Business School. “The Scots will press for for a new independence referendum and, if successful, will seek to join the EU. British businesses with substantial EU interests might then relocate from England to Scotland.

“The referendum was a bad political move. No sensible marketer goes to the public without new news. But the Remain camp offered nothing except the status quo. Anyone watching the national UK television debate on Tuesday could compare the hope and passion of the Leave campaign, led by former London mayor Boris Johnson, with the plodding, half-hearted economic arguments of the Remain team, led by new London mayor Sadiq Khan.

“The political realities will quickly become clear. Look for Boris Johnson or Michael Gove to become the new British prime minister within 60 days. There is no point in David Cameron hanging around until October. He blew it…for himself and for his country.”

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