Brexit Britain faces 5 to 10 year COVID recovery, Sorrell says
|11/09/2020 | 06:36am|
LONDON (Reuters) - Britain could take five to 10 years to properly recover from the pandemic because the COVID-19 financial hit will sap the economy of the firepower it needs to rebuild for Brexit, advertising supremo Martin Sorrell said on Monday.
Britain has recorded the worst death toll in Europe and the deepest economic contraction of any leading G7 nation from the coronavirus, forcing it to pump more than 200 billion pounds ($263 billion) into the economy to keep it afloat.
It is now preparing to finally leave the European Union on December 31, and is yet to secure a future trade deal.
"It is going to take a long time for the UK to recover unfortunately," Sorrell, the founder of the world's biggest advertising company WPP and one of the longest serving chief executives of British listed companies, told Reuters.
"It's going to be a tough 5 to 10 years, we're going to be 5 to 10 years before the economy fully recovers from the Brexit withdrawal and the industrial changes that will need to take place, to re-skill, to re-educate, to invest in the necessary infrastructure."
The United Kingdom left the EU in January but the sides are now trying to clinch a deal that would govern nearly 1 trillion dollars in annual trade before informal membership - known as the transition period - ends at the end of the year.
Even with a deal, importers and exporters will face delays at borders in the first months of next year as they adapt to the need for paperwork to trade with Europe, a level of friction that could threaten their role in regional supply chains.
Sorrell, now the head of a new digital and data ad group S4 Capital, said the country needed to embark on a new programme of investment not just in physical infrastructure but in 5G capacity and technology skills.
This was becoming more important, he said, after the pandemic forced companies to accelerate digital strategies.
S4 Capital posted third-quarter organic gross profit growth of 23% on Monday, helped by companies in consumer goods and healthcare transforming into digital businesses.
He is more bullish on the recovery chances of the United States, led by its tech giants, and of Asia Pacific. "I think western Europe is going to have more challenges," he said.
Ahead of the Brexit deadline, many company executives have criticised the government of Prime Minister Boris Johnson for failing to engage with business and give companies enough time to prepare for the biggest change to trade in more than 45 years.
Sorrell, who founded WPP during the premiership of Margaret Thatcher and has sat on many government-business councils in his time, said the criticism was justified as long as people acknowledged just how difficult the current situation was.
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(Reporting by Kate Holton; editing by Guy Faulconbridge)
By Kate Holton