By: Zak Goldberg
While there’s a great deal of speculation concerning the potential impact of Brexit, there’s very little clarity about how leaving the EU will influence specific firms and marketplaces.
This is largely because the nature of any future deal with the EU remains mostly unknown, while there is still a chance that the UK will exit the union without any kind of formal trade agreement.
From an inventor perspective, however, you may be tempted to think that there’s no immediate cause for concern. After all, James Dyson (one of the world’s most successful inventors) is a staunch Brexiteer, and one has regularly championed the opportunities that will exist in the Far East and Commonwealth post-Brexit.
This, coupled with the fact that it’s increasingly difficult to determine precisely what post-Brexit Britain will look like, will give UK inventors hope that their fortunes may improve outside of the EU’s jurisdiction.
While Dyson is right to assert that Europe only accounts for 15% of the global market, however, less established inventors and innovators in the UK will encounter some significant challenges come March 29th, 2019. Here’s a breakdown of the current situation and the potential implications of Brexit on emerging inventors.
Inventors and Brexit – The Key Considerations
Let’s start with the basics, as the relative size of Europe in relation to the global market must be placed into its proper context. After all, the UK currently has access to a single market with more than 500 million customers, while 44% of Britain’s goods and services were exported to the European Union as recently as 2015.
So, while British inventors would still have access to the single market post-Brexit, this would no longer by free and the cost of trading with European customers would increase significantly through tariffs. In the worst case scenario, in which the UK would exit the Union without having first struck a deal, Britain would need to apply to join the World Trade Organisation (WTO) as an independent member and become reliant on their existing tariffs.
This ranges from 10% on cars to a hefty 40% on some food items, so the cost of doing business in the single market could rise exponentially in the near-term. This would be particularly impactful for novice inventors, who may lack defined target markets, significant fiscal resources or an existing consumer base.
Similarly, creatives who are yet to apply for trade marks on their inventions will be required to pay more to protect their intellectual property (IP) post-Brexit, as a single application will no longer cover both the UK and EU markets after March 29th, 2019.
Instead, inventors that want to sell into the EU will have to make two applications; one that covers the future single market and another to protect IP in Britain.
Interestingly, patents will be not be affected by the advent of Brexit, as the European Patent Convention is based on a geographical representation of the continent rather than the EU or the single market.
For inventors whose priority is to target marketplaces in the Commonwealth or the Far East, Brexit will hopefully cultivate new and exciting opportunities in the longer-term. However, leaving the EU may complicate the route to international markets, while also increasing the cost of delivering products to their final destinations. This, when aligned with the increased cost of importing materials from the EU in the first instance, could force new inventors to adopt their strategies or proposed routes to market.
Inventors with existing interests or relationships in Europe could simply international routes by appointing an IP representative, of course, as this individual would serve as a regional counsel throughout the market and help to reduce costs while maximising efficiency.
Do the World’s Emerging Economies Offer Hope?
Now, one of the key, pro-Brexit arguments is the relentless rise of emerging economies, which are currently responsible for the vast majority of global, economic growth. The so-called BRIC member nations remain at the forefront of this drive, with Brazil, Russia, India and China set to become four of the top six economies in terms of gross domestic product (GDP) by the year 2050.
Similarly, China is also expected to supersede the U.S. as the world’s largest economy before 2030, while this unique nation will account for an estimated 20% of the world’s total GDP in 2050.
While this would seem to offer considerable advantages to British inventors who are looking to sell their products outside of the EU, the simultaneous (albeit relative) decline of western economies suggests that emerging countries will be more likely to rival their illustrious neighbours and compete for business across a number of markets than maintain their role as key support players.
This is reflected by the fact that the UK is expected to become the ninth or tenth largest economy in terms of GDP by 2050, with nations such as France also expected to experience a similar decline.
The Last Word
While Brexit may be a significant source of uncertainty for inventors in the UK, it’s fair to say that leaving the EU will create opportunities in the wider, global market.
The main issue will revolve around the increased cost of trading with single market members post-Brexit, with the need for additional trademark applications and the risk of diminishing margins potentially squeezing novice operators.
Beyond this, the rise of emerging markets will create more intense levels of competitions and tariffs for inventors to contend with, so this may yet not yield the bright new horizon that some are hoping for.
With the changing conditions, market traders also have the opportunity to diversify their portfolio and refine their strategies in the near-term. More specifically, they can look out for new market opportunities that emerge and the inventions that help to fulfil these, before targeting specific stocks and commodities in the process.
By Zak Goldberg
About the author
Zak Goldberg is a Law & Business Graduate from the University of Leeds who has chosen to follow his aspirations of becoming a full-time published writer, offering his expertise on all areas of law, fintech and business economics.
Featured image via Unsplash.