What does Brexit mean for the future of Brand UK?

24 June, 2016 Share socially

In other words, does perception of the UK depend on ‘Europe’ or not, and how might it be influenced by the UK’s departure?

FutureBrand produces two leading global research studies into Country Brand Strength (the Country Brand Index) and perceptions of the PwC Top 100 Global Companies by Market Capitalisation (the FutureBrand Index).

Perceptions of Brand UK

Taking country perception first, our research ranks the UK at 12th in the list of top global ‘country brands’. Importantly, when people rate a country as a ‘brand’ they are also more likely to visit, recommend and do business with it.

What does Brexit mean for the future of Brand UK?

So being seen as a country brand provides a tangible competitive advantage to the UK.

Within our sample of European countries, its overall ranking goes up to 7th out of 29 studied, behind Austria, Denmark, Norway, Sweden, Germany and Switzerland, but ahead of France, Italy, Belgium, Spain and Portugal.

Which means it is actually the 5th most strongly perceived country currently in the European Union.

What does Brexit mean for the future of Brand UK?

Within that, perception strength of the UK varies by dimension.

One of its weakest perception scores is in ‘political freedom’, a factor that might be positively influenced by the UK electorate asserting its independence from supranational political bodies like the EU.

Conversely, one of its strongest scores is in our ‘made in’ dimension – where it ranks 9th overall for ‘would like to buy products made in that country’. Part of the referendum debate centred on the impact Brexit might have on trade, so if the decision to leave does have an effect on demand for, or access to, the UK’s exports, this might weaken perceptions of the UK as a country of origin.

More qualitatively, our respondents perceive the UK to be politically and militarily influential across the world. They also perceive the UK to be ‘independent’ and a ‘leader’ in its own right, suggesting that these positive perceptions are not entirely dependent on membership of the EU or affiliations with other countries or bodies.

However, we wonder how far perceptions of the UK as ‘multicultural, diverse, modern and progressive’ might be negatively influenced by an even more independent political position.

What is clear is that perceptions of the UK are very strong in relation to its internal advantages, particularly around infrastructure, public services, heritage and ‘historical points of interest’ where it scores highest overall (5th position) – all attributes which do not specifically depend on being in ‘Europe’.

What does Brexit mean for the future of Brand UK?

Perhaps most importantly, UK perceptions are also strongest in relation to wanting to ‘live and study’ there (7th overall), and this is one of the three main drivers of a ‘country brand’. If leaving the EU weakens perceptions in this dimension, for example by creating impressions that living and studying in the UK is more difficult, then it might have a double effect on Brand UK – reducing its ranking in its strongest attribute and dampening its overall chances of being a ‘country brand’.

Country brand strength does not depend on EU membership

Stepping back from Brand UK, it is also clear from our data that European country brand strength does not depend on membership of the EU. Switzerland and Norway both rank more highly than most of their member state neighbours. In fact, Switzerland outranks all European countries and is second overall in the CBI ranking (5th for ‘business potential’, 3rd for ‘Made In’, and 1st for ‘Quality of Life’) demonstrating that EU membership is not essential to European country brand strength. Like the UK, Switzerland’s perception strength depends as much on associations with its internal attributes as its relationship with the outside world.

Perceptions of the UK’s largest global companies

So if country brand strength does not necessarily depend on membership of the European Union, and the UK’s brand is as much a factor of internal strengths as connections beyond its borders, what might Brexit mean for perceptions of the largest UK international companies?

When we look at the UK contingent of the world’s top 100 companies by market capitalisation, it seems they are less likely than their peers to be seen as ‘moving ahead in the next three years’.

We surveyed 3,000 people worldwide in May as part of our forthcoming annual ‘FutureBrand Index’ of large company perceptions.

When asked ‘Where do you see these companies in three years’ time?’ 49% said ‘moving ahead’, 37% said ‘standing still’ and 14% said ‘falling behind’. This compares to a rest of the world average of 58%, 34% and 8% respectively.

The largest UK listed companies in 2016 are Unilever, HSBC, British American Tobacco, SABMiller, BP, GlaxoSmithKline and Vodafone.

Whilst our research does not specifically seek opinions on where a company is listed, these weakening perceptions could be attributed to the large degree of uncertainty in the build up to the referendum.

If the decision to leave the EU brings with it greater certainty and clear implications for global organisations listed in the UK, then we might expect perceptions over time to strengthen in line with increased clarity on the future economic climate.

What does the future hold?

In conclusion, our data shows that being a strong ‘country brand’ provides the UK with a competitive advantage. Whilst the decision to leave the European Union might reinforce existing perceptions of its independence and leadership as a country, and not impact associations with internal advantages like heritage and culture, it might weaken perceptions in some of its strongest areas – not least the desire to study and live in the country and buy its products. However, it is also clear from our data that European country brand strength does not depend on membership of the European Union – as Switzerland’s strong performance demonstrates. So leaving the EU will not necessarily weaken the UK’s brand overall, but rather change the balance of perceptions in favour of new dimensions.

In terms of organisational perceptions, it is clear that the world’s largest UK listed firms are suffering from depressed perceptions relative to their peer group in the US and elsewhere this year. This correlates to a significant degree of economic and social uncertainty in the build up to the referendum. We expect the decision itself to reduce that uncertainty, and therefore create more favourable conditions for organisational perception longer term.

However, now the decision has been made, the critical dimension in both cases is the UK’s strategy in relation to its economic, social and political future.

Future perceptions of Brand UK and its most successful businesses will depend not on what the UK is ‘leaving’, but rather what it wants to become.