UK BREXIT and the Sharing Economy
The UK has decided to leave the EU….plain and simple! The wider ramifications of this decision needs no explanation. Every sector across the globe is already impacted, however the impact was exaggerated by ever present alarmism on the part of politicians.
With the EU out, this means Europe has entered a very familiar phase of Nationalistic Protectionism on the part of each member state. The UK was not first, Norway did this many years ago and turned out interestingly better off! With Protectionism however, this means more bureaucracy, border issues, regulatory complexities, trade barriers, among other issues. How does this affect the Sharing Economy?
For one, the EU blanket that made it possible to coordinate operations across Europe based on EU standards will no longer serve it’s purpose in the UK….which includes Ireland , Scotland, and Wales.
Secondly, new licensing requirements, concerns about consumer protection and tax compliance, and the lack of clarity in regards to labor relations between sharing firms and contractors pose an issue. Tax structures are bound to change once you cross the English channel, in addition to labor laws, and regulatory requirements.
Thirdly, while the European Commission published suggestions for ways to ensure fair treatment of sharing economy companies across all 28 member states in May, the UK has been very receptive to the sharing economy, while other countries have taken a more draconian stance. For example, France threatened to imprison executives from Uber, and Berlin imposed fines of €100,000 on some Airbnb hosts. With the decision by the UK to leave the EU, this may force a new wave of competition among Sharing Economy companies with targeted focus on member countries with a friendlier view towards the Sharing Economy.
Fourth, consumer confidence! Countries with a draconian view and countries friendly towards the Sharing Economy will have direct impact on consumer confidence in those member states. No one will list their apartments, or drive, or provide moving services if the risk of getting fined, arrested, or imprisoned is ever present. The Sharing Economy is fundamentally based on trust, thats why it’s called Collaborative Consumption. If the EU is placing emphasis on trust, which is a fundamental basis of Collaborative Consumption, an environment of heightened risk defeats this issue of trust. After all, you can’t trust what you fear!
Fifth, Labor laws! self employment status, entitlements, and benefits. With the drive towards protectionism within the 28 (-1: UK) member states, this creates a dilemma on the status of self employed gig workers. A Sharing Economy company would not want to be responsible for a self employed service provider who passed the background check a day before his or her work permit expired. Or the parental leave, benefits etc that employees of any company are entitled to. Will an insurance card from Poland be valid in London for a self employed service provider? How many hours a week in the UK vs. EU and how will self employment and regular employment be handled? Will the host country supersede EU labor laws or vice versa? Does this mean Sharing economy companies will need to adjust prices and rates based on geographic location within the EU member states on a country by country basis (we do this currently, but I’m sure it will become more profound).
BREXIT definitely puts the EU position on the Sharing Economy in a precarious but strategic position. This may further accelerate its exponential growth due to well targeted ventures focused on each of the 28 (-1:UK) member states.
Notwithstanding, the UK remains one of the top Sharing Economy centers in the world!