Brexit offers both risks and opportunities for Serco, says Rupert Soames, Group Chief Executive Officer of the private contractor, in the firm’s latest results, for the first half of 2016.
As for how Britain exiting the European Union (EU) after the June referendum might affect the company’s business with the British Government, Soames described the picture as uncertain: “On the one hand, repatriation of regulation and increased immigration controls will likely mean that the UK public administration has to do more, not less, and that is a potential opportunity for our business. On the other hand, the diversion of Government’s attention, and that of many of the country’s most talented civil servants, away from domestic policy towards Brexit negotiations, may slow the pace of domestic reform. It is too early to say how this will play out; our largest customers – the Ministry of Defence and the Ministry of Justice – are amongst the least exposed to Brexit issues, and, where delay occurs, it can be of benefit to incumbents.
Another area of possible impact would be in terms of our labour costs, he went on. “Only 2pc of our employees in the UK are Continental EU nationals, so the direct impact should be minimal. However, if there are severe restrictions on EU citizens working in the UK, this may have a wider impact on labour availability and cost. Overall, we think that Brexit offers both risks and opportunities for Serco. We see the main risks as macro-economic; if economic growth is slower than it would otherwise have been, this may have an impact on Government finances. If inflation and stricter immigration controls lead to higher labour costs, this may affect profitability. However, these impacts are likely to show themselves only over the long term.”
For the results in full visit https://www.serco.com/.
