How Brexit May Affect Your Company
Two years have passed since Britain voted to leave the European Union (EU), and it is creating an uncertain atmosphere in the EU as well as around the world. While a majority of the document has been agreed to by both parties, some major sections are still uncertain, which is drastically reducing the amount of investments made in the UK. The British government wishes to keep visa-free travel with other countries of the EU, yet whether this is reciprocated is unclear.
1. Current Status.
Once negotiations have ended and there is a finalized treaty, there will be a Transition Period between March 29th, 2019 and December 31st, 2020. This will allow businesses to adjust to the new post-Brexit rules. During this transition, all EU rules will still apply to the UK, including free movement of people and access to the single market. During those twenty-one months the UK government will be free to strike new trade deals, yet they will not come into effect until the end of the transition period.
So, how can you best prepare your business for Brexit?
2. Economic Impact.
To keep your business afloat and growing, it is imperative to stay ahead of the curve and understand the potential economic impact of the negotiations. There are currently three options for trade between the EU and the UK after Brexit, yet all of them diminish the projected GDP growth, with estimates of 1.6% to 7.7% decline in GDP depending on which deal is agreed to.
When preparing your business, it is important to know how Brexit will affect your industry. Chemicals, food and drink, cars and retail are projected to suffer the most. Be aware of the types of tariffs, quotas, or other regulations that could be applied to your industry. Ensure that your company has the flexibility needed to weather the upcoming changes.
3. Determine Stability.
While it is important to be flexible, you must also be able to hit the ground running when the transition period is over. Have a comprehensive plan for how your business will adjust to the new economic environment. Once you have done your research, you should prepare for any challenges that may arise. If your supply chain relies on goods sourced in the UK, know that their costs and availability may increase or decrease. If possible, consider diversifying or finding other sources.
4. Impact on Your Company.
Even if your business does not trade directly or interact with the UK, you could still be heavily impacted. That is why it is crucial to use this transition period to sit down with your clients, suppliers, and partners to discuss how the split could affect their business and how that could affect yours.
There is some uncertainty ahead, yet with careful preparation success is possible.
Brexit Monitor: The Impact of Brexit on (global) Trade by Jan Willem Velthuijsen and Lorenz Bernard, published 2016, https://www.pwc.nl/nl/brexit/documents/pwc-brexit-monitor-trade.pdf, accessed 06.15.2018
Brexit: All You Need to Know About the UK Leaving the EU by Alex Hunt and Brian Wheeler, published 06.11.2018, https://www.bbc.com/news/uk-politics-32810887, accessed 06.15.2018
What’s Happening With Brexit: 2 Year Update by Alasdair Sandford, last updated 06.11.2018, http://www.euronews.com/2018/06/11/what-is-going-on-with-brexit-euronews-answers, accessed 06.15.2018
How Bad Could it Get? Published 03.15.2018, https://www.economist.com/britain/2018/03/15/how-bad-could-it-get, accessed 06.15.2018
Brexiteers Claim that Trade on WTO Terms Would be Fine. Wrong, Published 09.30.2017, https://www.economist.com/britain/2017/11/30/brexiteers-claim-that-trade-on-wto-terms-would-be-fine.-wrong, accessed 06.15.2018
How Will Brexit Affect My Business? https://www.pricebailey.co.uk/business-challenges/will-brexit-affect-business/ accessed 07.02.2018