Should I Stay or Should I Go – some thoughts on the EU Referendum.

I would not normally write an entirely political blog, and I respect the right of every voter to form their own opinion. I have however become really disenchanted by receiving leaflets through my door which are full of untruths. Many voters have been reported to be asking for more facts, and this request is difficult to satisfy, as any predictions of future impacts have to be based on estimates, however this does not mean that those estimates are worthless. The scarcity of facts does not justify the lies which are being peddled.

The worst offending claims on leaflets arriving on my doormat have without doubt been those from the Leave campaign. Looking at some of their key claims:

  • “Britain sends £350 million per week to the EU”
    This is untrue and has been described as potentially misleading by the independent UK Statistics Authority.
    The fact that it has been repeated over and over again does not make it any more truthful. The UK only pays across about £250m and then receives back EU spending, making the net cost about £180m per week, or about £9 billion each year. In return for that contribution to the EU’s running costs our economy benefits from the opportunities for tariff free trade and travel.
  • “If we did not send all that money to the EU we could spend it on the NHS”
    This statement relies upon voters believing a fallacy that the UK’s tax receipts are a fixed amount. In fact they fluctuate with the health of the economy, which is commonly measured as GDP (Gross Domestic Product). Respected independent organisations including the Institute of Fiscal Studies, the National Institute of Economic Social Research and the OECD, all forecast deterioration in the UK’s economic prospects in the event of the UK leaving the EU. This deterioration would mean a contraction of GDP, and so a reduction in tax receipts. The majority of independent experts have forecast that this reduction in tax receipts would be greater than the cost of membership of the EU, and probably much greater. A reasonable midpoint of these estimates is that the UK’s public finances would be reduced by over £30 billion per year, at least in the short to medium term. So we would not in fact have that money any more, and far from being able to spend it on the NHS any Chancellor would be forced to cut their expenditure to fit the revised tax receipts.
  • “We have lost control of our borders”
    As the UK is not party to the Schengen agreement it retains full control over its borders. Shocking images have been used by UKIP and by the Daily Mail to suggest that the UK is being besieged by immigrants. There are in fact a number of different issues;
  1. Free movement within the EU for EU citizens.
    Personally I don’t even regard people from the EU as immigrants anyway. They are spending some time working here while our economy needs them. When it no longer does a fair number of them will move on somewhere else. They are typically healthy people of working age, and several independent studies have confirmed that they make a positive net contribution to our economy. Without them the country’s productivity would likely fall further, and in several sectors many jobs would simply not be getting done.
  2. The need for skilled labour from EU and non-EU countries.
    I have worked with a number of high-technology start-ups and university spin-outs. I have been horrified at the barriers which the UK Government have put in the way of allowing these companies to recruit the skilled (i.e. Masters or PhD level qualified) engineers and computer scientists they need, even when there are simply no UK citizens with the necessary skills. The CEO of Google is Sundar Pichai who was born in Tamil Nadu in India and grew up in Madras. The CEO of Microsoft is Satya Nadella who was born in Anantapur in India. Need I say more? Do we really want to keep down the numbers of immigrants even if we miss out on people of such ability?
  3. The refugee crisis
    There is of course a refugee crisis. The wars in the Middle East have displaced many people who are desperate, and many of whom have been making their way to Europe. Personally I think the moral thing to do is to work with our neighbouring countries to find a humanitarian solution, rather than to pull up the drawbridge of fortress UK. I appreciate that not everybody will share that view.
  4. “Immigrants take jobs from UK workers and drive down wages”
    Statements of this kind rely upon people believing the fallacy that there are a fixed number of jobs in the economy, and so each one taken by someone from overseas reduces the number available for UK citizens. It is not so simple.
    As I have already mentioned there are some jobs for which there are no suitably qualified UK citizens. There are other jobs which fail to attract applications from UK citizens, particularly seasonal work and work in the service sector. Our GDP fluctuates based on productivity and entrepreneurial activity among other things.
    i) A number of independent academic studies have failed to find any evidence that immigration is an important driver of low pay.
    ii) I will use a local micro-scale example to illustrate my second point. In Edinburgh I know a couple from Sweden who moved to Edinburgh 12 years ago. When they could not find a nice pub in their area they decided it was an opportunity to open one, and make it a Swedish wine bar. They now own six bars and employ about 140 people. I think this clearly illustrates that they did not “take jobs from local people” when they moved here.
  • “Taking back control of our country from unelected bureaucrats”
    So when we joined the EU (then known as the EEC) in 1974, and when we ratified further treaties thereafter, we agreed to pool and share some sovereignty in pursuit of international harmonisation. The EU has removed barriers to trade not only by removing tariffs, but also by harmonising regulations on product safety and quality. This has benefitted the UK economy by making it as easy (in terms of regulations) to sell in Munich as in Manchester. This has enabled our economy to flourish – it may have imperfections but the UK is after all one of the richest nations on earth.
    This remark about unelected bureaucrats is sometimes made in relation to the EU Commission, whose commissioners are appointed by member states. Although sometimes described as the EU’s Civil Service I would accept that they do propose laws in a manner which goes beyond a civil service. Those laws do however have to be ratified by the parliament – the MEP’s. We do of course vote for our representatives in the EU Parliament, although admittedly turnout in those elections is regrettably low, which is a shameful reflection of our own country’s commitment to democracy. As many others have already pointed out we do not get to vote for those who sit in our own second chamber, the House of Lords.
    It is another untruth to state, as the Vote Leave camp have, that over half of our laws are made by the EU. Given some laws are long and some are short it is tricky or impossible to arrive at accurate percentages. By any sensible measure the figure of 50% is a ridiculous exaggeration, as only 13% of our laws are passed to enable EU legislation or make any explicit reference to EU law.
  • “The EU is a source of red tape which stifles our industry”
    We do have some problems with productivity in the UK, but cannot lay the blame for that at the door of the EU. These claims about red tape seem to boil down to two issues (here I am indebted to Kevin Hague and his excellent Chokkablog ).
    i) Standardisation
    As already mentioned we have agreed to accept standardisation on a pan-European basis, as one means of opening up a wider range of markets. These may be objectionable to UK companies who do not aspire to sell overseas. Any manufacturer who does not sell overseas is likely to see their market share eroded as competition from the rest of the world takes their customers, by offering products that meet international standards. Let’s stop complaining and get exporting!
    ii)            Workers’ rights
    When businesses are bought and sold regulations such as TUPE mean the acquiring party has to respect contractual rights of the workers. Well that seems like a reasonable starting point to me!

    • “So many conflicting claims – I don’t know who to trust”
      It is understandable that many voters are feeling this way, whether they did or did not vote for the Conservative Party, which appears to be in a state of civil war over the issue of our EU membership.
      There are some key points to remember though when determining who to trust.
      i) The forecasts of an anticipated recession in the event of Brexit have come from respected independent sources such as the Institute of Fiscal Studies, the National Institute of Economic Social Research and the OECD.
      ii) The forecasts of a weakening of the pound and falls in the stock market are coming from independent banks and investment companies. You might think that you don’t need to worry about this, however as most of us now have defined contribution pensions, returns on which depend on the performance stock market it is unlikely that you will be unaffected.
      iii) The vast majority of the world’s economists agree that Brexit will lead to recession, at least in the short to medium run.
      iv)  Dismissing claims by experts and independent economists you have Nigel Farage, Michael Gove and Boris Johnson. Boris Johnson has twice been sacked from jobs on account of lying. This is a matter of public record. He was sacked by The Times for fabricating a quotation in a published article, and by Michael Howard MP for publicly lying about an extra-marital affair. In the latter case Johnson disputed the sacking, claiming he had the right to lie. He has also made offensive remarks about the Hillsborough disaster, Africans, gay marriage and many other things. He may be an intelligent man, but he is not an honest man, and his personal ethics make him unsuitable for positions of public trust. Many doubt his principles in joining the Vote Leave campaign and believe that he has been motivated by ambition.
      Nigel Farage is a former commodities trader who has somehow persuaded our media that he is a man of the people because he smokes and likes a pint. He has no qualifications in economics. His recent unveiling of an anti- immigration poster which looks just like a piece of Nazi propaganda has only confirmed my own suspicion of him as arguably being either a closet racist himself, or at least someone who is prepared to stoke the fires of racism in pursuit of his political agenda.
      Michael Gove is an unusual politician and clearly his own man. He appears to have deeply held views about the EU and has been prepared to risk damage to his career by arguing for them. His tenure as Education Secretary won him few friends and admirers.
  • “We should conclude our own trade deals rather than relying on the EU”
    I negotiate commercial contracts for a living. If I was negotiating trade deals would I want to be speaking as the representative of a country of 64 million people or one of the largest economic blocs in the world, the EU, which has a population of 508 million? That is an easy question. It is also easy to imagine that possible trade partners would prioritise putting their resources behind negotiations with the EU rather than the UK.
    Vote leave point out that we could be negotiating our own trade deals with fast growing economies like India and China, but they fail to point out that these countries are a long way down the list of our current export partners. We export more to the Netherlands than we do to China.


I know that as the polls have tightened the Remain camp have also been guilty of some hype and exaggeration, but for my part I am clear that many of the claims of the Leave campaign have been fundamentally dishonest, and designed to manipulate the British public.

If people believe that the UK would ultimately be better off outside of the EU, and they are prepared to endure 5-6 years of economic pain then they may wish to vote to leave. They should be clear however that the anticipated recession would hit the UK hard, would be likely to lead to even greater need for either tax rises or budget cuts, and it may potentially be the catalyst for a global recession, hitting anyone with a mortgage or pension savings.

For my part I do not like to be lied to, and am not at all persuaded that there are sufficient benefits from leaving the EU to merit these economic risks. The EU may not be perfect, but working from within we can act as agents of change, and let’s face it the UK does also have its failings, which we need to work on too. We are however a wealthy nation and I see no reason to take steps which could lead to the first voluntary recession in our history.

Posted in Economics

10 Key Criteria for Attracting Investment

King's Ransom small fileI was at a meeting recently where I was talking about how to make a company more investor ready. It became clear that it would be handy to produce a one page synopsis for my colleagues, and once I had done so I realised this would be a good thing to share.

1. Management Team
The management team is expected to be strong, include experience, and be passionate about achieving business plan objectives. It is preferable if one or more members have been on a previous company growth journey, ideally all the way to exit.
2. Market
The total addressable market is expected to be large and growing, preferably rapidly.
3. Customer validation
Probably the most important factor influencing investors is validation. Is there good evidence that your offering will be purchased by your target customers? Do you have an advisory board of credible industry experts? Do you have any strategic partners within the industry? Do you have early adopter users to whom investors can speak? Do you already have paying customers?
4. Business Model
Most start-ups fail because it costs more to sell their product than they are able to make from the sale. A big part of developing a viable business model is determining a cost effective way to sell the product. The other part of it is figuring out a great way to monetise customer value. Cost of customer acquisition should be low relative to lifetime value per customer.
5. Offering
Company must have a great product or service with clear competitive edge (in terms of meeting customer needs). It will raise concerns if the offering, even if it is in itself efficient, introduces new challenges / problems in the process of adoption. Disruption is not always a good thing, and it is easy to under-estimate customer inertia!
6. Business Plan
Company must have a clear plan capable of implementation within the planned timeframe.
7. Competition / Barriers to entry.
Who are the competitors, what are their strengths and weaknesses. How can the company prevent others from “stealing” the idea and running with it? Does it have a strong intellectual property position which is unique, preferably in the form of a patent or other “secret sauce”?
8. Legal and Regulatory environment
Will current or anticipated legal or regulatory issues benefit the business, or impede it?
9. Capital Requirement
Is the funding requested enough to take the company all the way to profitability, or at least to a clear “value inflection point” at which others will be attracted to invest at a higher price.
10. Opportunity for a profitable exit
How will the investor realise any gains in the value of the company? Who might acquire the company? Is there a community of likely buyers, and do they have a track record of making acquisitions, and deep enough pockets?
11. (O.K. I cheated here)  Strength and breadth
No weaknesses which are too hard to address in any of the above criteria!

Posted in Investment Tagged with: , , ,

Copyright law in LA – Are the lines blurred?

The BBC has reported the verdict of a court case in Los Angeles which resulted in damages of $7.3 million being awarded to the family of Marvin Gaye. The jury found that the song “Blurred Lines” by Pharrell Williams and Robin Thicke infringed the copyright of Marvin Gaye’s song Got to Give It Up from 1977.
As a professional working with intellectual property (IP) on a daily basis, and an amateur guitarist and avid music fan I always take an interest in cases such as this. As it happens I am not a particular fan of Marvin Gaye, nor of Williams and Thicke.
This verdict is an interesting one however as it seems to fly in the face of previous precedents in copyright cases. In many previous cases, and I am thinking in particular of disputes within bands, it has been held that royalties for song-writing are split between the composer of the melody, and the author of the lyrics. For these purposes melody is defined as “the aspect of musical composition concerned with the arrangement of single notes to form a satisfying sequence”. You might think of it as the tune you would hum if you were trying to represent a song.
Now this definition is important because there are many parts to a tune you hear on the radio, over and above the melody and the lyrics. Most of these are referred to as the “arrangement”, although they may include rhythm, harmony and percussion. Musicians will also refer to the “groove”, the “vibe” or the “feel”.
In 1997 Puff Daddy’s song “I’ll Be Missing You” sampled the guitar line from “Every Breath You Take” by The Police. Royalties were payable to Sting, who wrote The Police song. This was legally correct but controversial however as the guitar line in question had not been written by Sting, but by Andy Summers, the guitarist for The Police, whose training on classical guitar allowed him to construct this superb arpeggiated guitar part with, according to Summers, no guidance or input from Sting. Under copyright law however Sting is considered the composer of “Every Breath You Take” by virtue of having written the melody and the lyrics. The guitar part by Summers was considered to be a work of “arrangement” only, not a work of composition. (I understand that Sting and Summers did come to an agreement whereby Summers does see some of the income from Sting’s receipts from “I’ll be Missing You”).
So for my money “Blurred Lines” does indeed copy the arrangement of “Got to Give It Up”. It has the same “groove”, i.e. its rhythm and percussion in particular, so the damages award may well be just. It does not however copy the melody or the lyrics. So it is perhaps worth questioning whether copyright law is confusing when applied to modern tunes. Indeed there have been dance tracks in recent years which have been all percussion / groove, with scarcely any melody or lyrics.
So I’ll end this with two questions. Is it fair that all of those damages go to Marvin Gaye’s estate, rather than to the musicians who contributed to the arrangement which was copied? Is copyright law sufficient (and clear) when complex questions of musical arrangements give rise to dispute such as this?

Posted in Uncategorized Tagged with: , , ,

I would walk 500 miles …or thoughts on a trade fair

Okay, 500 miles is a huge exaggeration but we were walking an average of 8 miles per day at Intermot last week on behalf of our client Visorcat, and as you can imagine we had very sore feet at the end of each day. But as they say: ”no gain without pain”, so it just had to be done.

Intermot is an international motorcycle, scooter and e-bike fair which is held every two years in Cologne; in fact Intermot celebrated its 50th anniversary this year which confirms that it is a well-established event in the German trade fair calendar. The Intermot team have just e-mailed me to advise that over 200,000 visitors from 105 countries saw the newest innovations and trends from 960 suppliers from 37 countries. So it really is the event at which the international trade places its orders and consumers get their information.

Day one of the fair was reserved for trade visitors only. This was a new arrangement for 2014 but it allowed buyers and sellers to get down to serious business and get some deals done before the consumers descended on the Messe, which they did in their thousands on the following days. With typical German efficiency the Messe is well served with its own train station but of course many motorcycle enthusiasts arrived by bike, announcing their arrival in the bike park with some very noisy engine revving – clearly an Intermot tradition!

Intermot is big as evidenced by our daily mileage. There were six large halls featuring touring motorcycles the size of sofas to trendy little city scooters which would not have looked out of place being ridden by Audrey Hepburn in the film “Roman Holiday”. Innovation is definitely a key element of Intermot but this year it was also about retro and in some cases the downright wacky, as evidenced by this cute little number:


lovely moo-ver

Intermot is definitely dominated by the big names, including BMW, Kawasaki and Ducati, whose marketing budget for Intermot can only be described as eye watering. However, there was also strong representation from the German Mitteltstand; those companies that manufacture helmets, leathers, gloves, boots and other accessories. The main European motorbike magazines were in attendance along with companies that service the German motorbike touring market, so there really was something for everyone at Intermot.

And what was our experience? Given the sheer scale of Intermot, is it a good forum for a small and fairly new company like Visorcat?

Well, we definitely generated interest in the product. Businesses do like to have something new to offer their clients and Visorcat was clearly perceived as innovative and worthy of further investigation. The next couple of weeks will be spent following up on leads and hopefully we will be able to take some of our trade fair conversations to the next level.

2014-10-02 15.38.24

Would we return in 2016?

We would love to and it would be great if sales to German speaking markets were sufficient to justify a small stand, with plenty of seats of course.

Posted in Uncategorized

Selecting an overseas supplier

Companies are increasingly looking overseas for new suppliers who can offer competitive pricing on raw materials, components and general business consumables.  When you take into account language barriers and different ways of doing business it is inevitable that things go wrong and the supply chain can come under threat. So what steps should companies looking for new suppliers take to make sure they get it right?

It’s important to draw up a list of potential suppliers and then to carry out due diligence on the company and its directors.  Ask for bank and trade references and follow them up.  Once you have a short list of potential suppliers, contact them and request a quotation.  Ask them to state prices and the applicable Incoterms® rule; they should also indicate if any discounts are available for volume and early settlement.  Be sure to ask for the manufacturing lead-time and the transit time separately; suppliers can be guilty of quoting the shipping time but forget to tell you it might take a month to manufacture the goods.

Be clear on the payment terms and method.  Make sure that any bank account details provided for payment relate to a business account rather than a personal account to avoid getting involved in a potentially fraudulent transaction.  You should also request sufficient samples of each product to allow you to adequately test them to make sure they meet your quality standards.

The decision to put an agreement in place with a new supplier shouldn’t just be based on the product and the price.  You should also take the following factors into account:

Ease of communication – do you or your potential supplier have at least one member of staff who can communicate adequately in the other’s language?  This is important to make sure there are no misunderstandings which could be expensive.

Size of company – is the company large enough to manage your requirements and how would they handle a significant increase in orders from you?

Stability – find out how long the company has been trading and how well established they are.  It is also worth checking to see how long they have been manufacturing the products/components that you wish to procure.  If they frequently change their product range to meet demand for the latest must have item, perhaps they can’t really offer you the supply chain security that you require.

Location – are they located near to an airport or a seaport which allows for easy and fast transit?

Innovation – are they constantly seeking to improve their offering by refining the design of the product or by adapting the manufacturing process to get the benefit of cost savings which can then be passed on to you?

Of course, once you have found your new supplier, it is important to hold regular review meetings with them, even if this is just a monthly phone call.  This allows both parties to build a stronger relationship and provides an opportunity to discuss any known future events that might impact on supply and demand.


Posted in Uncategorized

Brazil 1 – Uruguay 0

No, we haven’t taken up predicting football scores for a living! We haven’t even watched a single World Cup match. However, this football related news story did catch our attention as it is relevant for every company that exports.

The Uruguayan football team travelled to Brazil for the World Cup with 39kg of Dulce de Leche in their luggage. Dulce de Leche is a popular Latin American confection made by cooking down milk with sugar and was presumably intended for pre-match consumption to boost energy levelsAnchor on the field. However, on arrival at Brazilian customs all 39kg of Dulce de Leche were confiscated as the Uruguayan team did not have the correct paperwork! Despite pleas from the team that they hadn’t had any issues when they took supplies of Dulce de Leche to the World Cup in South Africa, Brazilian customs officials were unrepentant.

The context of this particular story is amusing and no real harm has been done. However, imagine the consequences if customs confiscated a high-value consignment for a key customer because an important document was missing.

Export documentation is a key part of the export process and we can help you ensure your paperwork is complete.  Please contact us for more information: anne.murphy[at]

Posted in Uncategorized