On 23 June 2016, a referendum took place to determine the future of the UK’s European Union membership. 51.9% of voters voted in favour to leave the EU. The Prime Minister has stated he wants the UK’s exit from the EU to be beneficial to British businesses, allowing the maximum freedom to trade and operation in the single market, whilst still maintaining a fully independent country able to make its own decisions.
Preparing for Brexit
We keep hearing that businesses should be planning, but with the possible outcomes shrouded in so much uncertainty it is difficult. FIS has created a checklist (accessible below) for its members to help to create a structured approach to fathoming how Brexit may impact on their operation. It is not exhaustive, but starts to create a framework for thought. Not withstanding potential upside drivers (such as unlocking work that may be delayed due to current uncertainty) some of the possible challenges may include:
- Availability of EU workers exacerbating skills shortage
- Currency volatility and impact on estimates/contract prices
- Availability of certain products (in their normal timescales) resulting from new import procedures
- Impact of availability on product approvals or certification
- Changes in VAT and tariff charges
- Cash flow impacted by changing stock levels and assessments of credit risk
- Contractual liabilities for delays
Depending the outcome of ongoing talks, should the UK adopt a No Deal Brexit stance it is likely freedom of movement would be limited and new Border Controls will be required to manage the flow of goods under the WTO rules. This would be the “hardest Brexit”. There remains a possibility that a version of the Theresa May Transition Agreement is voted through Parliament and this would effectively give us an “implementation period” to prepare for any changes. In this period we would be bound to EU Regulation and EU Free Trade Agreements. Softer long-term options include Canada +, which would mean a two-year transition period, a trade deal covering goods (but not all services), new border controls and more limited movement of people. A softer still option would be the Norway + Deal, this would deliver us frictionless borders and would mean the UK is effectively remaining in the single market (and freedom of movement of labour). All may be delayed or postponed depending on the potential for leadership challenges, General Elections or even a Second Referendum.
Whilst we strongly hope our Government steer us smoothly into the next era of UK economic growth, it won’t hurt to have a quick scan of this list and consider appointing a Brexit Project Leader to engage with people in the business and external stakeholders and providers to ensure that you are prepared for any required adjustments.
FIS will be reviewing this tool on a regular basis as a way of supporting members in unpicking the impact of Brexit on their business.
Once you have run through this tool, there is a new Prepare for Brexit Tool that hopes to give you answers to some of the questions that may be thrown up. You can access this UK Government tool here.
Prepared originally by Iain McIlwee, CEO FIS, 12 December 2018
Updated: 12 September 2019