Getting On With Brexit in the City That Hates It the Most
European connections helped power Bristol’s prosperous economy. Now its vibrant high-tech companies are struggling to plan ahead.
Bristol’s Temple Quay Market looks like the Britain that wanted to stay in the European Union.
Tech workers in jeans and loose shirts mingle with lawyers in dark suits at the weekly food bazaar, its stalls selling everything from Taiwanese-inspired pork belly bao to Greek lamb wraps and grilled-cheese sandwiches featuring woodland mushrooms. A few steps away, cyclists whiz by on a curving pedestrian bridge over the Avon River, on their way toward the revitalized city center.
Eating lunch in a stone amphitheater carved into the riverbank is a microcosm of that microcosm: a handful of workers from software startup Boxarr. Along with four Brits were two French expats and a recently arrived Greek software developer. Like Temple Quay’s multi-accented street traders, they’re doing their best to get on with it—but being frustrated by some of the obstacles Brexit is throwing up.
“The uncertainty of the whole thing has been damaging,” said Alasdair Pettigrew, the chief executive officer, pausing to take bites from a hefty smoked-brisket sandwich. “And I think that damage, not just for us but the whole economy, will start to manifest itself as we go forward. We would be further on in our growth if the politicians had done a better job.”
Pettigrew’s challenge is a common one this summer as thorny negotiations on the country’s departure get under way in Brussels. With so much up for discussion, from the rights of millions of EU citizen-residents to the U.K.’s future trade relationship with the 27 countries of the tariff-free zone, planning ahead has never been a more fraught exercise.
The feeling is particularly acute in places like Bristol, a liberal, immigrant-heavy city of 500,000 about 120 miles west of London. It voted to remain in the EU by 62 percent, an even larger margin than in the cosmopolitan capital. Bristol’s prosperous economy is powered by technology and aerospace—industries that have benefited immensely from European talent and the commercial links made possible by EU membership.
Boxarr, one of four British companies Bloomberg is following throughout the Brexit process, is in both sectors. Its eponymous software is designed to help companies and governments organize large engineering projects, and is used by clients including plane manufacturer Airbus and engine maker Safran SA. Like most U.K. companies that require technical skills, Boxarr has had to look to the continent to find the right staff. For now, EU nationals can still work without trouble in Britain, but no one yet knows the rules under which they’ll be able to stay, let alone those for future arrivals.
That was a subject of joshing among the lunchers. As French engineer Romain Roques approached the group, Pettigrew joked that he may end up running Boxarr’s French division if everything goes wrong. “Worst-case scenario, I go back to France, which isn’t so bad,” Roques responded with a smile.
Nonetheless, Pettigrew says recruiting is going well, and Boxarr has had a successful year so far, deepening its relationship with Airbus and making its first inroads into the automotive industry. He’s pounding the pavement to seek U.S. clients, and revenue is on track to double from last year’s $530,000. The company is also seeking fresh capital from investors to fuel its growth.
A mechanical engineer by training who spent most of his career at International Business Machines Corp., Pettigrew, 49, has adapted comfortably to startup life, joking amiably with decades-younger staffers and adopting the industry’s unofficial uniform of open-necked shirts and chinos. He describes the company’s software as “a tool to understand the implications of decisions, of complex processes” and discusses with visible excitement the potential of breaking into burgeoning industries like renewable energy.
Still, in a business defined by long-term contracts that can commit clients to substantial spending years down the road, economic uncertainty is an insidious foe. The longer it goes on, the greater the challenge. With so much of the U.K.’s political and economic bedrock suddenly up in the air, companies “can’t see two weeks ahead of them,” Pettigrew lamented.
Prime Minister Theresa May’s threat to walk out of talks without a deal may be an even more alarming prospect. Positioned by the U.K. as a tough-minded negotiating strategy, the possibility baffles Pettigrew. “I just don’t understand what ‘no deal’ would look like,” he said. “What we need from the politicians is for them to instill some stability.”
The early signs sent the pound plunging toward $1.20, though sterling has stabilized at about $1.29 in recent months. The effect on Boxarr’s own finances has been nominal, since much of the company’s revenue comes from abroad, but it will raise the cost of expanding in the U.S. Paying employees in dollars is suddenly a lot more expensive, finance director Greg Francis explained.
That will be a big consideration for U.K. firms hoping to follow the lead of Trade Secretary Liam Fox, who’s in Washington this week to pitch a deeper transatlantic trading relationship with the world’s largest economy.
At the West of England Aerospace Forum, an industrial organization based outside Bristol, CEO Simon Young says he’s urging members to “create linkages with other clusters around the world,” and to invest in cost-saving technology like automation to offset the impact of any potential tariffs. At Boxarr, Pettigrew is trying to make the case to European companies that new complexities arising from the divorce will make process-management software more crucial.
Things could be worse, as one of Boxarr’s own staffers, programmer Konstantinos Katakis, can attest. “I worked in Greece during the crisis,” he said as colleagues tucked into their curries at Temple Quay. “Compared to what was happening then, things in the U.K. aren’t so bad.”