By Professor Pervez Ghauri, University of Birmingham, UK ([email protected]) and
Professor Ursula Ott, Nottingham Trent University, UK ([email protected])

After more than forty years of UK membership in the EU, the UK and the EU have been negotiating the exit of the UK from the EU for two years. We analyse possible outcomes of these negotiations. There are examples of countries that are not members but have a close relationship with the EU. These examples provide possible outcome of Brexit negotiations.
 
The Brexit-Negotiations could have been conducted amicably with offers and counter offers. However, while the EU have been trying to be rational, the UK has been negotiating with a somewhat emotional approach. In most negotiations, parties do not get what they wish, they must give and take to come closer to reach a compromise. In a so called White Paper, UK announced twelve objectives that it wanted to achieve. We analyse some examples that can help the UK achieve these objectives:
  
Norway Model. This model allows an access to the single market by paying a membership fee and allowing free movement of people which was clearly rejected by British referendum and the White Paper. Therefore, this model needs to be negotiated, which might be difficult.  
Canada Model. This agreement was achieved after several years of negotiations and includes free trade in many products/services and no free movement of people. This needs a long period of negotiations and would mean uncertain and difficult time for UK residents.   
Ukraine plus agreement. This model is rarely discussed by British politicians or by the media. However, it seems to be the closest to objectives listed in the White paper. In addition to free trade in most products/services and no free movement of people, this agreement includes security collaborations that is desired both by UK and EU.    
No deal = WTO rules. In case no deal is agreed by 29th March 2019, all present arrangements will cease to exist, and several agreements will have to be negotiated following WTO rules for trade. This might lead to similar arrangement as US-EU trade relationship and may take several years to negotiate.
UK model on the table: Single market access (through tariffs, quota, agreements and payments) and special agreements to be negotiated for financial services, security issues, Northern Ireland border and no free movement of people. The negotiations will proceed following offers and counter-offers depending upon the bargaining power of parties.
 
While remaining in EU is the best option for the UK, at present this seems not to be achievable unless there is a second referendum and majority of people vote to remain. Considering the present deadlock in the UK parliament, a second referendum is a real possibility. Keeping the second referendum aside, our analysis reveals that the Ukraine plus model is the most suitable for the UK. The next best option is the Canada model. The Norway model is not a very viable option as the UK will have to pay a membership fee and it will have to accept some level of free movement of people. 

To read the full academic article click here
Ott, U. F. and P. N. Ghauri (2019). "Brexit negotiations: From negotiation space to agreement zones." Journal of International Business Studies 50(1): 137-149.

By Dr Agnieszka Chidlow, Birmingham Business School, The University of Birmingham   

Since 25 May 2018, the European Union (EU) Parliament and Council enforced the General Data Protection Regulation (GDPR) as the primary law regulating how companies protect EU citizen’s personal data. Any organisations that are not compliant will face heavy fines. But what does the GDPR mean for scientific and statistical research?
 
It is worth noting that, the Regulation treats the processing of personal data for scientific and statistical research separately, for example:
 
1) For scientific research it points out that “the processing of personal data for scientific research purposes should be interpreted in a broad manner including for example technological development and demonstration, fundamental research, applied research and privately funded research (...) To meet the specificities of processing personal data for scientific research purposes, specific conditions should apply in particular as regards the publication or otherwise disclosure of personal data in the context of scientific research purposes (Recital 159, p.30)”.  Even though not explicitly stated, these “specific conditions” may refer to ethical standards for scientific research (Recital 33) as well as all listed safeguards.

2) For statistical research it indicates that “where personal data are processed for statistical purposes the Union or Member State law should, within the limits of the Regulation, determine statistical content, control of access, specifications for the processing of personal data for statistical purposes and appropriate measures to safeguard the rights and freedoms of the data subject and for ensuring statistical confidentiality. Statistical purposes mean any operation of collection and the processing of personal data necessary for statistical surveys or for the production of statistical results. Those statistical results may further be used for different purposes, including a scientific research purpose. The statistical purpose implies that the result of processing for statistical purposes is not personal data, but aggregate data, and that this result or the personal data are not used in support of measures or decisions regarding any particular natural person (Recital 162, p.30)”.

Even though the GDPR creates very strict obligations for processing and collecting personal data for scientific and statistical research, it offers some exemptions as part of its mandate to enable a Digital Single Market across the EU. More specifically, by allowing researchers to process data beyond the purpose for which it was first collected, the Regulation exempts research from the principle of storage and purpose limitation. What is more, in limited circumstances, it also allows researchers to process sensitive data without a consent as well as to transfer personal data to third countries that do not provide an adequate level of protection.
 
However, it is rather unclear as to how exactly such exemptions will extend. But what is clear is the fact that the GDPR aims to encourage innovation as long as researchers implement the appropriate safeguards, as stated in Article 89 (page 84) of the Data Protection Act.

By Prof. Rajneesh Narula OBE, Henley Business School

The run-up to Brexit Day has been a windfall for the chattering classes. We have known since June that this day must come, and thousands of commentators – perhaps millions, if you include the discussions in living rooms and pubs across Europe – have visualised and considered the various possible shapes Brexit might finally take; what would be gained and what might be lost, and how the future of Britain in the 21st century might unfold after B-Day.
Non-Europeans are quite bewildered by the number of column inches and minutes devoted to Brexit in our newspapers, online fora and broadcast news. B-Day is still a subject for fantasy: there is even less clarity as to the UK government’s position. In short, uncertainty still abounds, and this reflects itself in the value of the Pound against most currencies. That there is so much difficulty agreeing on a withdrawal agreement does not bode well for the actual negotiations, because almost every aspect of life is shaped by the intensity of the embrace from which the UK wishes to extricate itself. Converting hundreds of years of formal and informal treaties and institutional arrangements into new law is mind-bogglingly difficult.  Article 50 is a harbinger of mirthless days for all, with the possible exception of lawyers and consultants.
It is a matter of incredulity to the rest of Europe that Brexit is not some practical joke, and I say the ‘rest of Europe’ because these islands will remain part of Europe, and two millennia of interaction will not suddenly stop on ‘moving-out’ Wednesday. Indeed, there is no moving-out: The UK, like some petulant teenager, is simply giving formal notice of relocation two years hence (but like all teenagers he feels he can demand things without considering the quid pro quo). 
But here lies the rub: this is not a petulant teenager leaving home, but the legal divorce of long-married couple who have a wide variety of common property, offspring, shared interests and responsibility, and a lot of history.
To the outside observer, the UK has painted itself as the much-wronged and misunderstood teenager, while the EU has portrayed itself as the unappreciated and long-suffering spouse who is being dumped in an acrimonious and public breakup.  These two contrasting views that continue to be propagated by either side assure us of a convoluted and discordant two-year negotiation. The teenager feels confident that its (estranged) extended family in the form of the commonwealth will clutch the prodigal cousin tightly to their bosom. Alas, it is already clear that Empire 2.0 is fantasy.  On the other hand, the EU knows where it stands: its position is clear. The deck, to use another tired metaphor, is stacked firmly in their favour, and they know it. That they offered a Soft Brexit shortly after the referendum was a kindness, but in its spurning, little has been gained except Trump-like hubris and ill-will.  
B- Day brings to mind that other famous British folly, The Charge of the Light Brigade.
 I hope 29 March 2019 proves me wrong.

By Prof. Nigel Driffield, Warwick Business School

Inward investment is of vital importance to the UK economy. Compared to other G7 countries, the UK has had the highest percentage of inward FDI as a percentage of GDP, at 64 per cent of GDP in 2014 (ONS 2016). Much of this investment is from other EU member states, as Figure1 shows.
 
How is inward investment likely to be affected by the UK leaving the European Union?
Investors in the UK will face a number of challenges as a result of Brexit if they seek to sell into the EU and operate supply chains that cross between the UK and the UK. The devaluation in sterling will also have an impact on inward investment decisions.
 
There will be challenges for investors if they seek to operate supply chains that cross (sometimes several times) between the UK and EU. When the single market was created in 1993, many commentators speculated that intra-EU FDI would plummet. This turned out to be far from the case as firms took advantage of the opportunities to coordinate resources across countries. The single market connects innovative firms to the richest market in the world and, through EU regional policy and structural funds, allows firms to take full advantage of location economies where labour is available in low-cost locations. Most recently, Honda has warned MPs of the consequences of leaving the customs union.
 
 
From an inward investment perspective the essential problem is that the ‘middle region’ of activities of the value chain, characterised by lower value added and higher volume of employment, are often carried out outside the UK. Developed countries attempt to “plug the gap in the middle” by seeking inward investment that will generate employment for the squeezed middle. This can be achieved by identifying key sectors that hit the ‘sweet spot’ of high productivity but also employment generation. However, these sectors, such as advanced manufacturing, food technology and financial services, are the ones most vulnerable to frictions in value chains which drive away investment, due to the way they are organised in the single market.

1. Develop an inward investment strategy through greater understanding of why firms seek to invest in the region. High value added FDI adds significantly to the underlying technological base of the economy, but creates fewer jobs, while FDI that generates large scale employment is typically (though not always) associated with less cutting edge technology. So our strategy needs to communicate which sectors will be able to attract inward investment of what type, and where this most likely to be sourced. This emphasises not ‘sectors’ as such, but value chains, where activity within the region is positioned within an international setting, and the vulnerabilities of value chains to global changes, or to macroeconomic factors such as exchange rate changes or changing terms of trade.
2. Focus inward investment efforts on sectors where free trade with the EU is less important. This means seeking to maximise the benefits of large scale investments in infrastructure (in the context of the Midlands, HS2); recognising the need for example to support skills in jobs around project management and professional services associated with infrastructure projects; and building robust supply chains to support infrastructure development.
3. Maximise the returns on inward investment. This again requires an understanding of the benefits of inward investment, for example of the benefits to supply chains or through knowledge transfer from inward investors into local firms. In order to understand how policy levers in this space can be applied, one has to understand the motivation and financing of FDI. For example, in the years prior to the financial crisis, a high proportion of global FDI was funded by debt, that has since not been available. One response therefore needs to seek FDI which is genuinely exogenous to the UK, that is, it is funded, not by loans financing raised from UK capital markets, but from the home country. This varies by country. Much Asian FDI for example is now funded by cash flow generated in the home country, compared with US, EU and Japanese investment which is typically debt financed. A country strategy is required therefore for investment promotion agencies as well as a sectoral strategy.
4. When selecting key sectors for inward investment, focus on job creation as well as value added One concern of the moment is that, in contrast to the 1980s/ 1990s when the focus was all of job numbers, there is a current obsession in policy circles with productivity. This means that some locations are focussing on what they can attract (including skilled workers) rather than focussing on how to create employment opportunities for the people in their region. This needs to focus on job quality however rather than just the number of jobs created.