My role over the last two years has been to attract and support U.K.-based businesses in expanding their operations to the Toronto Region. Having travelled to the U.K. on several business missions to pitch the region as a top destination for investment, I’ve had the privilege of seeing the increase in awareness in the U.K. business community about Toronto. No longer do our British friends identify with Toronto as the city where they have distant relatives, or where they went on vacation when they were six years old. Today, the Toronto Region is on their radar as a place to grow and expand their businesses.
Much of this interest is driven by our existing relationships. For instance, did you know that Canada and the U.K. are the only two countries that are members of the G7, the G20, NATO and the Commonwealth? The U.K. and Canada are the 5th and 10th largest economies of the world respectively with a combined GDP of just under USD$5 trillion. The U.K. is Canada’s largest and most important commercial partner in Europe and fifth largest globally, with merchandise trade between the economies standing at CAD$26.5 billion in 2017. The U.K. is Canada’s fourth largest contributor to foreign direct investment in several key sectors, including financial services, infrastructure, aerospace, science and technology. Our major pension funds, like CPPIB, OMERS, OTPP and others, have taken large stakes in assets in such as the London City Airport, Canary Wharf, Burton Biscuits, and even the National Lottery operator, Camelot.
Increasingly, though, the U.K.’s business community has come to recognize the emerging strengths in the Toronto Region. My U.K.-based clients are no different. Over the last two years, they’ve come from a variety of industries and sectors including financial services, artificial intelligence, business services, engineering, architecture, pharma, consulting, and even fire suppression. In fact, in our first fiscal year, just over half of the 27 companies that Toronto Global helped expand to the Toronto Region were based in the U.K. Not surprisingly, my client list is tech-heavy, mainly because these companies, many of which are based in London, are naturally attracted to the Toronto Region because it is a financial services and technology hub. The region, which includes Brampton, Mississauga and the regions of Halton, York and Durham, are known for their manufacturing, logistics and pharmaceutical industries and provide excellent expansion opportunities for U.K. businesses in the Northern Powerhouse cities. Add the high quality talent, connectivity to the U.S., and shared cultural and moral values to the mix, and the Toronto Region starts to sound increasingly appealing - despite our snowy winter!
As businesses in the U.K. look increasingly toward the Toronto Region as an attractive business destination, there are a few things they are focusing on.
Firstly and most importantly, our region has been seeing phenomenal growth over the last few years, especially in the technology space. Not only are existing technology companies in the Toronto Region expanding, but companies from around Canada and the world are building new teams across the region and contributing to the flurry of business activity – much of it driven by our abundance of talent. Although a large percentage of it is home-grown, a significant number of international talent is also arriving at Toronto’s doorstep through immigration, the increase in international students studying in Canada and staying to work here as well as the skill-based visa programs offered by the federal government. It was no surprise then that Toronto saw an unprecedented CAD$1.4 billion in investment in Toronto from Microsoft, Uber and Shopify in the month of September 2018 alone. The Toronto Region’s bid for Amazon’s HQ2 also was of enormous benefit as the region received worldwide recognition when it was shortlisted in the top 20 cities, and was the only Canadian location to feature in that list. Toronto Global was the lead organization for the Toronto Region bid and our bid book was downloaded over 20,000 times.
Brexit and Canada’s Trade Agreements
There’s also Brexit (I can’t believe I got this far without saying the “B” word!). U.K. companies with growth aspirations can no longer expect to access the E.U. market as easily and freely. To generate growth, they have to expand internationally, and Toronto offers a great option given its stability, low-risk, proximity to the U.S. market, a renegotiated NAFTA, and the CETA agreement between Canada and the E.U., giving companies preferential access to the world’s largest economic zones. Canada is the only G7 country that holds free trade agreements with every other G7 country. When the CPTPP trade agreement is fully functional, Canada will enjoy preferential market access via 14 trade agreements to 51 countries with 1.5 billion consumers and a combined GDP of US$49.3 trillion!
The U.K. has also identified Canada as a substantial trade and investment market for the U.K. and has appointed Andrew Percy as the Prime Minister’s Trade Envoy to Canada. It is only a matter of time before Canada and the U.K. ink a bilateral trading agreement once the U.K. formally exits the E.U. This will only strengthen the commercial links between the two allies.
The second half of 2018 was littered with economic, political and regional instability. Trade wars and barriers between major trading partners such as the U.S., China, and the E.U. made headlines on a daily basis, giving rise to uncertainty for businesses. Canada had its fair share of trade drama as well, which it has now put behind us in the form of NAFTA 2.0. Businesses need certainty to grow, and the Toronto Region is recognized for its stable political and regulatory environment. Brexit in the U.K. and worries about the U.S. are turning companies toward the Toronto Region, where businesses can find the certainty and stability they so desperately need to thrive.
The Toronto Region’s business climate offers highly competitive advantages that make it more cost-effective than other major cities in the U.S. or Europe. The cost for hiring talent in Toronto is very competitive and attractive for employers. At the same time, universal healthcare in Canada means employers do not have to spend an extravagant amount on buying health plans for their employees. In the Amazon HQ2 bid we estimated substantive savings to employers from the provision of a single payer healthcare system. The comparison with the US for companies in terms of health care costs is striking. Canada offers a Scientific Research & Experimental Development program to companies doing R&D in Canada – and it is one of the most generous tax incentives in the industrialized world.
Working with companies in the U.K has been a truly rewarding experience. The friendship and commerce between Canada and the U.K. is steadfast and thriving. Our transatlantic relationship stands the test of time.
If you are a U.K. business exploring international markets, connect with Salman Khan to learn more.