Brexit and trade war in the foreground during management session

In economically uncertain times it is refreshing and useful to get clarification from a number of experts. During the management session on Tuesday at FHI in Leusden, Mathijs Bouman and Pieter Cleppe provided insight into the impact of Brexit and the trade war on economic and political relations.

Willem van Raalte, chairman of FHI, opened the session and announced “two fascinating stories that are more topical than topical”. Originally, Brexit was the main theme, partly because the trade war was not yet raging so fiercely. Both themes now play a major role in the uncertainty that reigns over the global economy.

Economist and journalist Mathijs Bouman kicked off. Under the title 'Clouds in front of the sun? The boom threatened by international developments' Bouman gave an overview of the current state of affairs in the Dutch and global economy. As concrete threats, in addition to Brexit and the trade war, he also listed a number of other sore points: a cooling Chinese economy, the malaise in the German (automotive) industry, a construction freeze and above all an extremely tight labor market.

According to Bouman, the business community has missed opportunities in recent years and has made too few in-depth investments. But he is particularly concerned about the tight labor market: "We are ill-prepared for that. The number of vacancies is at a record high and we are seeing a lot of aging. The customer is no longer king, staff is king," he said.

Many plus points

However, the economist also stated that after the credit and euro crisis, we have seen quarterly growth in the Netherlands over the past five years. There are also many positive aspects to be noted: solid domestic demand, growth in the service sector, rising wages and both a loose monetary policy and a loose budgetary policy.

According to Bouman, the outcome of the trade war is still uncertain. Globalization has been the engine of prosperity since the fall of the Berlin Wall, but world trade has not grown for two years. The Netherlands is in the middle of the international value chain, while the US is increasingly becoming a closed economy.

The Brexit was described by the economist as “self-harm” by the British. “Furthermore, we have no idea yet what a Brexit will exactly entail,” Bouman said. “The UK is very important for the value chain, it is our second trading partner.”

Finally, Bouman delved into history. The Van Bosse-Fock Cabinet (1868-1871) had no interest in patents. According to Bouman, this turned the Netherlands into a pirate state. In 1910, patent law was reinstated, but companies such as Philips were able to stand out because of it. Bouman openly wondered whether the patent system was still a useful system.

View on Brexit

The second speaker was Pieter Cleppe. He is affiliated with the think tank Open Europe. He stated that in the midst of the Brexit violence, the EU should focus again on its core task: removing trade barriers.

Cleppe also outlined the chaotic nature of Brexit in recent years. He discussed the trade deal that May made with the EU but failed to pass in the British parliament and stated that Boris Johnson has played it harder with Brussels.

According to Cleppe, there is a good chance that Brexit will still happen after the British elections, although it is also not excluded that there will be a second referendum. What is uncertain is what will happen after the transition period: many agreements still have to be concluded. In short: much is still unclear about Brexit.

After the two lectures, the visitors to the management session proceeded to a delicious meal. And both Brexit and the trade war could well become themes for the 2020 session.