As Britain proceeds with the dissolution of its marriage to its long-term partner, the European Union, it has started to court new companions, among them Israel.
Brexit — the process the UK has initiated for withdrawing from the EU, which is estimated to impact economic (PDF) growth, create financial instability and cut jobs — is a challenge, but it also presents “huge” opportunities for Israel, said Hugo Bieber, chief executive of the chamber of commerce UK Israel Business (UKIB), who led the chamber’s largest business delegation to Israel last week with a similar message to Israeli firms.
More than 35 British investors took part in the group’s three-day visit to Israel, during which the representatives met with leaders of the local tech community, including from Check Point Software Technologies and Wix.com, startups and VC investors. The delegation follows the September Innovate Israel 2017 conference hosted by UKIB, in which the British government called on Israeli financial institutions and companies to invest in hundreds of energy projects in the UK, with a focus on the clean-energy sector, in an effort to attract new investor interest.
In an interview with The Times of Israel last week, Bieber made a hard sell for Britain: The lower pound has made it cheaper for Israeli firms to set up their business in Israel, as the British currency shed some 15 percent of its value in the year since the UK voted to leave the European Union. It is still easier, language-wise, to set up a business in the UK than in other European countries, and there are direct flights to London which has a wide connectivity to the rest of the world, he emphasized.
“The government is taking a more proactive stance to attract firms there, offering benefits in some sectors,” he added. There are better government grants than other countries are offering, some of which don’t need to be repaid, he said. “Sometimes it is free money, depending where you set up.”
Bieber’s message was upbeat, but the road ahead still looks bumpy for Britain.
Earlier this month, London witnessed the loss of EU agencies to Paris and Amsterdam in one of the most painful and concrete signs of Brexit, and more may be on the way. Uncertainty about the process and what will entail for business is holding back companies from investing in the UK and setting up there.
An Ipsos MORI survey in October of members of foreign chambers of commerce based in the UK showed that 55 percent of all country respondents think the likely effect of Brexit on future investments by their companies in the UK will be negative. One in five (22%) think their decrease in investment will be greater than 10%. By contrast, just one in ten of all respondents see Brexit having a positive impact on their future investments in the UK. Details of the survey were published earlier this month by the UK Israel Business.
Seventeen Israeli firms operating in the UK that were also polled gave responses in line with those of investors from other countries: 65% of respondents said that they were “not very confident” that a good deal will be achieved for the UK by March 2019; and 53% were “fairly negative” on their UK investment outlook, though 24% thought Brexit will have “no effect either way” on their plans.
The Israeli firms also listed issues of most importance in the Brexit negotiations: 71% said that a solution must be in place for companies to have access to the EU market for goods and services; 41% said that continued regulatory alignment with the EU was important; 35% said that access to skilled workers was essential; and 24% said that it was important for Britain to strike trade deals.
Bieber said Israeli firms should ignore the gut reaction to Brexit and make the most of the opportunities the event could present. In addition, he said, there is a huge interest in Britain in Israeli technology, and that should create fertile ground for collaborations.
Brexit, said Bieber, “is a real opportunity or Israel and a challenge for the Brits, but a challenge that we will probably manage.”